The Conveyor Belt Paradox
I’m baffled by the amount of startups in the Middle East that ask for 1m dollars with a valuation of 10m dollars! How is it possible that everyone (yes I’m exaggerating to make a point) regardless of sector, market, potential or margin all need the same amount? I mean I get it – when there are a lot of unknown factors you look for a proven formula to give you guidance but this is pushing it…
We as Entrepreneurs are looking to disrupt or at least transform a market, as Dany Farha BECO Capital (see pics below) would prefer me to say. Our thinking 24/7 should be about how to find a different model, way, product that improves something and is worth paying for. We pride ourselves in being creative and a little smarter, seeking new paths and questioning old structures. That’s why I can’t understand how the funding process has become a conveyor belt where everybody (yes still exaggerating) acts the same, asks for the same amount and succumbs to the same simplified pitch process.
If you are looking for funding from an angel investor, seed fund or VC there are a few things they’ll always want to know about you and your business. No rocket science there. Equally there are a few things you need to know about your investors before you sign anything. Entrepreneurs build businesses and create value. Investors invest in businesses to grow their capital. You can’t have one with out the other.
Take every opportunity to pitch your business… in a competition on stage when you get a ridiculous 2min slot or just harassing the guy next to you on the plane. But my suggestion as a funding strategy is to prioritize the adult conversations that you as an entrepreneur can lead. Let me clarify – it’s a conversation where both parties ask, learn and make judgement calls on the benefits of the potential investor-entrepreneur relationship. Let’s stop this conveyor belt where all pitches are massaged down to a similar format of max 2mins and we act like kids who are asking parents for pocket money.
The awesome guests on stage on Tuesday in Riyadh all testify to the importance of finding your own way and building a strong, genuine relationship with your advisors and investors. HRH Princess Reema shared stories of the challenges she faced when recruiting family and friends to her business. You would think friends would be the best partners but too often money and confusion in the decision-making process gets in the way of long friendships. It’s tough. The audience and I were impressed by her candid story of learning her business as she went along. I for one am grateful to again be reminded of the importance of really thinking through and understanding your supply chain management.
The serial entrepreneur and “Super Angel” (his preferred title :-)) Dany Farha of BECO had a lot of interesting nuggets to share. Firstly we should learn from his mistakes and find a monopolistic market opportunity… and that he as an investor values a tenacious entrepreneur. He’ll say NO within 60 seconds of a pitch and then it’s up to us as entrepreneurs to keep the conversation going… No good business stays the same from idea to success so it’s all about the entrepreneur’s ability to tweak, improve and pivot.
Growing your business and recruiting the right team is crucial and super difficult. Leena Khalil co-founder of MumzWorld made an interesting analogy to raising kids that I’m sure is valid. They (kids and team alike) need to know what the values and main goals are so the ships runs smoothly even when you’re not present for all decisions. Hats off to Super Mom, Super Boss Leena and lovin’ the stories about her Super Kids!
Amal Dokhan from Kaust Accelerator Program “super” elegantly guided the entrepreneurs in their Story Telling. And as always I’m star struck and impressed by the King Maker Ahmed Alfi, Chariman of Sawari Capital, who came from Cairo to coach the Saudi based entrepreneurs. “Ideas are open source, execution is proprietary” – hear hear! It’s all about who and how you do it. Alfi also reminded us of the importance of understanding your audience… Investors are somewhat lazy and impatient and want to get to the point in a pitch… so connect emotionally quickly and show them your model, the addressable audience and your estimated conversion rate. Give investors numbers… ie do the calculation for them. Best advice was to make sure to have practiced so you can anticipate every possible question! No one said it was easy to be a “super” entrepreneur. The challenges are in abundance, risk is high, work-life-balance is out the window, and you need to find your own path to funding and valuation.
“If you don’t build your dream someone else will hire you to build theirs”.
Special thanks to my amazing and supportive friends at Alwaleed Philanthropies. Mona, Abir and Lamia – you are a huge inspiration. Super sponsors!
Thank you Mr Ambassador for embracing a new terminology… “Crazy”, “Naïve” and “Geeky”
