Startups should find investors with goals aligned with theirs
ENTREPRENEURS should build relationships with investors whose mission is aligned with theirs, according to a startup specialist.
“Go beyond the transactional quid pro quo relationship and you will get people’s buy-in on the mission you’re trying to do and the solution you’re offering to solve a problem,” Judge R. Calimbahin III, manager for entrepreneur experience at nonprofit Endeavor Philippines, said in an interview.
Bringing an investor into your business is like bringing someone into your home, he said.
“Before you bring a guest, you need to know who they are first… You need to know if they are strategically placed, if they’re well-placed to support you,” he added.
It takes a while to build these relationships. “You need to convince them too that [the business] is a good investment, and that there is a market for it.”
A common source of funds for early-stage companies are friends and family, according to the US Securities and Exchange Commission.
Angel investors or high net worth people who invest their own money in emerging businesses, and venture capital funds can also bring in money.
Plug and Play Tech Center, a California-based venture capital firm, has partnered with the Philippines’ Department of Trade and Industry to offer funding and training to at least 40 startups through a so-called accelerator program.
Financial institutions have also been making inroads in financial inclusion for small businesses.
The partnership of GoTyme and Paymongo Philippines, Inc., for one, allows small- and medium-sized enterprises under the latter’s merchant ecosystem to apply for loans of as much as P500,000 through the former’s banking services.
“There’s a lot,” Mr. Calimbahin said. “The challenge is figuring out where [these funds] are, and navigating which one is perfect for you as a company.”
Each investor will have their own strengths and networks to provide, he told BusinessWorld.
“Anyone can just give money… [but] it’s important to find the investors that provide the most strategic value,” he added.
Mr. Calimbahin advised entrepreneurs to view themselves as stewards of the money they’ve been given, regardless of the reason for raising funds.
“Treat it as if you’re the steward of the funding of your investors,” he said, citing Steve Sy, founder and chief executive officer of Great Deals E-Commerce Corp., a high-impact startup that Endeavor had supported.
Consider the true value of what you’re spending — whether it is for the team’s growth or market growth, he added.
“How can I ensure that the amount of money I invest in… can eventually grow over time, in the sense of whether the team is happier for it or more productive?”
Aligning goals is crucial because entrepreneurship is a tough journey, Mr. Calimbahin said. “It’s not easy, but if both you [and your investors] are aligned in the same vision… then it’s easier to get through the challenges.” — Patricia B. Mirasol
