Introduction:

When it comes to investing in startups, the focus is often on the investor’s perspective – what is the risk and reward?  How much should I value an early stage company for and how do I do that?  All valid and important questions. However, it’s equally crucial to consider the viewpoint of the founders—the visionary entrepreneurs behind these innovative ventures. In this article, we consider what founders should take into account when seeking investment for their startups and the factors that contribute to successful partnerships.

Alignment of Vision and Values:

For founders, finding investors who align with their startup’s vision and values should be paramount. It’s not just about the financial investment; it’s about partnering with individuals or firms that share the same passion and belief in the startup’s mission.  The startup path is often rocky, having investors you can work with, collaborate with and who may provide valuable guidance and support throughout the entrepreneurial journey will mean the likelihood of success increases considerably.  .

Strategic Expertise and Industry Network:

Smart money, Investors who can bring strategic expertise and industry knowledge to the table should be at the top of your hit list.   Investors should be seen as partners who can not only provide capital but also valuable insights and a network of connections.  Wherever possible engage with investors who fit this ticket and the benefits they bring in terms of experience and contacts will likely far outweigh their financial investment.   

Long-Term Commitment and Patient Capital:

Startups require time to develop and scale their operations, often far longer than founders would think and certainly longer than they hope for.  Look out for investors who exhibit a long-term commitment and understand the value of that.  This sort of ‘patient capital’, understands that success does not happen overnight and these investors provide stability and support, allowing founders to focus on executing their business plans without unnecessary pressure to deliver immediate returns.

Value-Adding Mentors and Advisors:

Occasionally founders may find investors who not only bring financial resources but also act as value-adding mentors and advisors.  This type of investor is extremely valuable and will often commit considerable time in offering their expertise, mentorship, and guidance in areas such as product development, marketing, fundraising, and talent acquisition.  However, while these  investors play an instrumental role in the growth and success of the startup they must be selected carefully.  Not all mentors will be the right fit for you and not all mentors have the depth of understanding required to mentor.  Choose carefully as a misaligned mentor could potentially be damaging.  

Cultural Fit and Trust:

Building a successful startup requires a cohesive and collaborative team dynamic. Founders prioritize investors who fit well with their company culture and foster an environment of trust and open communication. Trust is crucial for founders to feel comfortable sharing their challenges, seeking advice, and working together towards shared goals.

Track Record and Credibility:

Just as investors may consider a founder’s track record, founders should also consider an investor’s track record and credibility in the startup ecosystem.  Look for investors with a proven history of successful investments, relevant industry experience, and a solid reputation.  This track record not only instills confidence in the founder but also provides additional credibility and attracts other potential investors.  It is important to make your own enquiries and learn about your investors before committing.

Flexibility and Supportive Approach:

To say startups often encounter unexpected twists and turns along their journey is to perhaps underplay the difficulty of the founder’s journey.  There will almost certainly be unexpected challenges along the way.   Founders should seek investors who they believe will demonstrate flexibility and a supportive approach during challenging times. Value investors who understand the dynamic nature of startups and are willing to adapt strategies, provide additional resources, or offer guidance when needed.

Conclusion:

Investing in startups is a collaborative process that requires alignment, trust, and shared values between founders and investors.  Both founders and investors are in for a long, at times difficult, certainly risky but hopefully profitable relationship.   While we have described these requirements from the founder’s perspective they equally apply to investors.  All parties should value factors such as vision alignment, strategic expertise, long-term commitment, value-adding mentorship, cultural fit, track record, and flexibility – as they all contribute to a successful partnership. 

At East Bridge Creative we understand these priorities and we aim to forge strong relationships between investors and founders and in so doing actively contribute to the growth and success of the startups we support.  If you have questions with regard to investing in or founding a startup in the Asia Pacific region we are always willing to discuss, please contact us here anytime.