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More Than Money: The Investor-Startup Relationship

 Feb 4, 2014 5:58 PM

At its most basic, the goal of every entrepreneur is the same: to find success in the marketplace, to grow a bigger, more successful company, and to make a meaningful difference in their field. But none of this can be done without the help of a certain, very important partner — an investor.

But how does a startup find an investor right for their company and, on the flipside, how does an investor find the right startup to invest in?

Here, investors and DMZ startups share their two cents about how to foster and maintain a mutually beneficial relationship.

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“It’s really a people-to-people business. It’s not just about investing money,” says Gerard Buckley, managing director and partner of Jaguar Capital, a Canadian financial advisory board for early- and growth-stage startups. “It’s about trust, it’s about people understanding each other, and people having an alignment with each other.”

Buckley has over 30 years of experience in financial markets; as a seasoned investor, he reviews more than 100 startup pitches each year.

“We tend to bet on jockeys, not horses. We’re looking for a strong team,” Buckley explains.

Venture investor Matt Golden, founder and managing partner of Golden Venture Partners — a venture capital fund focused on early-stage mobile opportunities — also stresses the importance of the human factor when looking for a company to invest in.

“The three things I look for in a startup are team, market, and traction — largely weighted in favour of team,” Golden says. “An overview of the business plan is sufficient. I’m much more focused on the qualities of the entrepreneur and their values, background, and their passion around a particular problem that they’re solving.”

As an experienced entrepreneur-turned-investor in the mobile marketplace, Golden says demonstration of some market adoption is key, as well as drive.

“Investors want to see that something is there,” he says. “We’re looking for entrepreneurs who have a breakout, disruptive mentality.”

The investor-startup relationship goes both ways; entrepreneurs need to take the time to look beyond the money and find a partner who best suits their company, their goals and their business personality.

Rob Platek, co-founder and CEO of SensorSuite, a wireless cloud-based sensor system for buildings, understands this principle and discerns that not all money is equal. His product acts as a digital central nervous system for controlling building functions like temperature control, securing of doors and status of machinery. To date, it has raised more than $200,000 in funding.

“We’re looking for smart money. Money, but also connections and a network to leverage the people they know, and help us get into new companies that we could never tap before,” Platek explains.

“People want to spend their money on things they believe in and feel a part of,” says Konrad Listwan-Ciesielski, co-founder and CTO of Kira Talent, an online interviewing platform that provides employers with a better way to assess job candidates. His company has raised $2 million in a round led by Relay Ventures. “You want investors to believe in you, and believe in the future and the vision of the company.”

“At the end of the day, investors are stakeholders in your company,” he adds. “You’re essentially trying to accomplish the same goals.”

Once the ink has dried, constant communication and honesty are vital in maintaining a healthy partnership.

“Continue building a relationship and setting up parameters of ongoing transparent communication,” Golden says.

“The relationship is one of great mutual respect,” Buckley adds. “Investors are there to help mentor and provide the resources to those super talented entrepreneurs.”

“It can be one of the most wonderful, rewarding business relationships to strive for.”


  

 

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