Entrepreneur

Here's Why Your M'sian Investors Actually Like You—And When They Won't

Owning a business may be sugarcoated with tales of success but there may come a time when they’ll find themselves falling behind their competition as the startup ecosystem continues to grow.

Last night, BEAM hosted a forum titled ‘Beam Insight: Raising Startup Capital’ with a panel consisting of three investors: Saikit Ng from Captii Ventures, Sam Shafie from pitchIN, Alvin Lai from TinkBig Venture; and one startup founder, Yienyee Soh from AVANA.

A question of when can investors tell that a startups will fail or succeed was brought up. The three investors shared their thoughts on the matter and what they look for in a startup after the investment has been made.

1. Establish Mutual Trust

Saikit mentioned that as with any other relationship, the basic element of a business relationship between investors and startups is trust. The startups have to be able to believe that the investors usually have their best interests in mind.

“By engaging with the startups on a regular basis, what I expect to hear is what are the problems and challenges they’re having rather than them providing me nice charts,” said Saikit.

Thus, when a startup is unable to be upfront with any obstacles they may be facing, Saikit states that is indication number one on a startup’s potential failure in growth.

“Being trustworthy is very important. Don’t just consume and think all we want to hear is good news. In fact, what I appreciate more is when startups are able to tell me the bad news upfront, so then I can help. We don’t like surprises so in this business relationship, you need to trust that we’re here to help you, not reprimand your actions,” remarked Saikit.

2. Work As A Partnership

Alvin Lai from TinkBig Venture talked about it from a different angle.

“Imagine the journey like a marriage. Whatever problems you have, we are here to help. Don’t see us as someone higher than you because in this relationship, we’re more equal than anything,” said Alvin.

One of the reasons a startup can fail is when they see the investors as the ones who are in control rather than partners working together for the same cause. He stressed out the importance of a startup being on the same level as an investor in order for efficient and rapid growth for both parties.

“As a startup, you have to remember that you’re the ones who will make the change. We as investors are only here to facilitate. So a mutual understanding between both sides needs to be established for us to move forward together,” said Alvin.

3. Be Transparent And Honest

Sam Shafie clarified the importance of honesty and transparency when it comes to differentiating those who will survive in this competitive scene and those who will fade away.

He mentioned how one similarity that a lot of startups who will last long have is the fact that they do not need to be prompted to provide reports or to share with their investors the hardcore reality of their situation.

“For us investors, we’re like a SWAT team. You honestly tell us the problem, we’ll come in and solve it for you. If I can’t, I’ll get someone else in the network to solve it for you. But those who stay silent, the day when they finally tell me is the day when I know that they’re dead. Because the company can’t function anymore,” said Sam to the audience.

It’s a common perception among the startup scene that they’re always afraid to frighten the investors away if they are honest. So in the end, they amass a lot of problems until they reach a point where it’s too big until it can’t be solved anymore. At that point, the only choice for investors to make would be to accept the losses and move on.

“From the first three accelerators, we actually closed three companies within months of developing. This is all because they weren’t being honest with us. By the time they were, it’s too late. It’s not hard, just remember to keep us informed. That is one of the biggest difference between those who will succeed and those who will fail,” said Sam.

Feature Image Credit: Kenneth Ho on Facebook

 

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