I met with an entrepreneur for lunch recently who had just completed raising a modest series A round. Curious, I asked about the most challenging part of the process. His answer was maintaining the faith in your startup’s vision.
It was an interesting answer because you might expect the answer would be the preparations, the creation and constant revisions of presentations, and the meetings with investors that require you to be confident yet respectful.
When I asked for an explanation, he said one of the realities for startups when they raise money is investors are intent on picking everything apart – the vision, the business model, the opportunity, the people, etc. For some people, this can be a difficult exercise because it flies in the face of entrepreneurial enthusiasm and the dyed-in-the-wool belief in what you’re doing.
In some respects, it’s like an abusive relationship in which one party tries its best to please while the other party insists on picking them apart. The reality, however, is investors need to scrutinize, criticize, question, analyze and challenge entrepreneurs so they can make as good as a decision as possible. It doesn’t mean they have to be badly behaved but sometimes things can get testy.
Entrepreneurs can find themselves buffeted about and, in some cases, they may find themselves questioning their vision, which was rock-solid before the investment dance started.
While this could be a natural reaction when you are trying to please, it is also important for startup entrepreneurs to be strong about what they’re doing and where they’re going. While investors can highlight deficiencies and areas for improvement, entrepreneurs need to be careful about not their stripes simply because they come across people who don’t share the vision or the opportunity.
In an ideal world, entrepreneurs end up with investors who can provide insightful and constructive criticism, while providing the right amount of support and encouragement. It may mean, however, dancing with partners who don’t like your moves.
At a conference earlier this week put on by the Ontario Media Development Corp., I kicked off panel I was moderating by boldly declaring the Canadian startup landscape is as exciting and healthy as it has ever been during the 15 years I’ve spent as a reporter, entrepreneur and startup consultant.
As many Canadian shoppers head out the door to battle the crowds for Boxing Day deals (a strange and bizarre activity in my opinion!), it is interesting to look at back at how many Canadian high-tech companies were snapped up this year.
As a growing number of start-ups attract financing, it is difficult not to get the impression it represents a major accomplishment or victory. When a start-up announces that it has completed a deal, it is cause for celebration and congratulations from friends, colleagues and the community.