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When you get the financing right, it’s easy to get on your feet.
Author丨Lu Zhigao
Source 丨Investing.com
In recent years, with the drastic changes in the primary market, going to startups has become an option for many investors.
From investors to startups, and then from startups back to the Internet mafia, Xiong Fei, a former partner of Matrix Partners, joined Flying Book not long ago, triggering a hot debate in the venture capital industry.
In this regard, my colleagues expressed their blessings to Xiong Fei Give Xiong Fei students a round of applause. At the same time, many eyes are once again focused on investors who join startups.
After some understanding, I found that the retention rate of investors in startups is not high, and there are many investors who have not passed the probationary period. Since start-ups attach more importance to output, if investors who join a start-up do not have the mentality of a start-up and prove their value through performance, they will find it very difficult to survive in the end.
Less than 20% survival rate
Investors going to startups is not a new thing. However, unlike previous active jumps, many investors today are passive joiners.
For some time now, the primary market recruitment market shows that supply far exceeds demand. Annie, who has nearly 10 years of headhunting background in the financial industry in the primary market, said bluntly that an investment position often attracts dozens or even hundreds of applicants. As a result, going to startups has become the second best choice for many investors. In the face of an increasingly competitive environment, in the view of some investors, even if they just go to startups to transition, at least they will not let themselves idle.
Let’s start with a few cases.
After leaving the investment organization, Lena, who had been idle for some time, finally chose to go to a startup company.
Lena’s background in US dollar funds and her familiarity with overseas markets were the main reasons why the other company was interested in Lena. According to the startup’s plan, it hoped that Lena could get some financing from the US dollar fund, so as to better expand the overseas market.
For Lena, this is not an easy task. Although she knew some investors from US dollar funds, they were generally cautious and couldn’t offer much help.
As a matter of course, Lena had to keep her head up to get the money. As she watched the financing struggle, Lena’s anxiety grew, as she wasn’t sure how much longer she would be able to stay with the startup.
From investment organization to startup, and then back to the original investment organization, Feng Yun can be said to be the lucky one.
In the process of investment, Feng Yun saw a portfolio company develop rapidly and judged that the track had a good development prospect. In the end, Feng Yun chose to take the initiative to join the startup, and began to be responsible for corporate strategy.
However, he only stayed at the startup for a few months. He didn’t tell me why he left. After a lot of back and forth, Feng Yun went back to his original investment organization and continued to do investment.
Going to a startup is not without its benefits. For Feng Yun, in addition to a more in-depth knowledge of the relevant industry, but also gained some industrial resources, in the investment can have a more accurate judgment.
Compared with many investors, Ding Yuan belongs to the group of people who have adapted well in startups.
After investing for several years, Ding Yuan joined a portfolio company in a related field to take charge of financing when the favored track was not yet hot. In the following three years, he not only helped the startup company to successfully raise hundreds of millions of dollars, but also recruited a lot of people for the team.
My feeling is that it’s not easy for investors to adapt to the environment of startups and gain a firm foothold, no matter whether they are actively joining a startup or passively joining a part-time job.
Fewer than 20 investors are routinely able to pass the probationary period after being parachuted in or actively seeking employment at a startup. Anni told me this.
In Annie’s observation, many investors who go to startups often find it difficult to pass the probationary period, and even if they do pass the probationary period, very few of them are able to integrate with their bosses’ ideas in the long run.
Startups don’t keep idle people
For startups, investors are usually prioritized for their capital operation ability.
Under the premise of consistent values, startups expect investors to be able to handle either money or orders. Zhou Feng admitted that for talents with investment background, startups prefer the other party to prioritize financing.
As a successful serial entrepreneur, Zhou Feng is not only an investor, but also a co-founder with his partners. At present, Zhou Feng is mainly responsible for investment and financing in the startup.
This is something that Mr. Ding Yuan agrees with. Ding Yuan told me, investors join the startup, the probability that the first thing to do is to help each other to get the money, which is their biggest differentiation value compared with others, after all, financing is the lifeblood of most startups.
It’s just that, in the current market environment, it’s pretty tough for startups to raise money. This can be said to have become the industry consensus. In the face of the status quo that most investment institutions are cautious to make a move, even if they used to be investors, the role they can really play and the value they can bring to bear on the financing of startups is relatively limited.
Many investors after joining the startup, the reason why it is difficult to pass the probationary period, the main performance is not up to standard . Zhou Feng told me that startups value results, in which to do things must have output, startups, do not keep idle people.
In addition, with the changes in the environment of doing things, the investor’s mentality can not be adjusted in time, is also very critical.
In Annie’s opinion, the culture and atmosphere of investment organizations and startups is a big gap, when investors join the startup, the identity has changed. If there is no startup mentality, while adapting to the new environment as soon as possible, then it is difficult for investors to stay in the startup for a long time.
Doing investment is different from financing, and it is very difficult to look at the enterprise statement and put the business on the ground. Zhou Feng bluntly said that because investors will often come into contact with all kinds of founders, startups are most afraid of joining the investors who have a high opinion of themselves.
Once you can not get good results, while the mindset is not adjusted in place, investors will be difficult to establish deep trust with the founders. If there is not enough trust between the two sides, it will be invariably more difficult for the investor to advance the business in the startup. Ultimately, the situation for investors who join startups becomes quite unpleasant.
It’s important to pick the right time
In the two-way choice between investors and startups, different timing of joining may face different situations.
Whether it is a good choice to join actively, or passive part-time work to transition, or even with capital into the group to start a business together If the timing of going in is different, and the value of the investor to the startup is different, then the difficulty of the challenges faced is also different.
At any given time, startups with good growth potential are in the minority, which means good positions are relatively limited. When the startup needs you the most, any terms are negotiable. Conversely, when the other side doesn’t need you, then your importance decreases dramatically.
The answer Ding Yuan came up with was Either sooner or later. He further explains that you can either join when the other party has just run through commercialization, which is risky but easy to negotiate shares, or you can join when the other party has the expectation of going public, which is not very rewarding but low risk.
Getting the financing right makes it easier to get on your feet. With spare capacity, you can also participate in the business. After being responsible for managing the accounts, the level of trust between the two sides is high. In Ding Yuan’s opinion, when the investor can discuss the company’s development rhythm with the founder, it is considered a partner in the real sense of the company.
This can not be separated from the deep trust between the two sides. The establishment of this trust, the key is that investors have to come up with convincing results, the conventional way is often time-consuming and difficult.
More direct and quick results, in fact, is the investor with capital into the group, the two sides to carry out the depth of the interests of the binding. However, this also depends on the resources the investor has, and what role he or she wants to play in the startup.
Entrepreneurship is entrepreneurship, part-time work is part-time work, if the investor has the determination and vigor to start a business together, then you shell out money is the best answer. Ding Yuan’s feeling is that some founders will think that the other side of the money is a real recognition of the company, but also allows both sides to realize the depth of the interests of the binding, in a short period of time, both sides of the trust is easy to build up, the investor can also get more access.
This operation, there is a key role. Regardless of the amount of money, after the capital can become a real sense of the name of the shareholders, to a certain extent, can effectively guarantee their own interests.
Although the options of the startup company looks very attractive, but if there is no liquidity and can not be cashed, then for investors who join the startup company, it is actually a wonderful cake.
Lena Feng Yun Ding Yuan Annie Zhou Feng, all pseudonyms.
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