Why did we refuse 3 investment offers?
Hello friends! So we have a blog on Megamind, for which many thanks to the TM team. My name is Alexander and I present a simple and convenient ticketing system for small teams called Teamdesk . We openly talk about our development with the publication of all the figures, plans and internal kitchen. Today let's talk about the investment.
As of today, we have already received 3 proposals for investing in Timdesk from different investors, although the project started only a couple of months ago and did not earn a penny. We have not seriously considered any proposal. This may seem strange, especially when hundreds of start-ups are trying to get funding, but we have our own plan ...
When we just launched our first “adult” project 5 years ago, the industry of IT start-ups and venture financing was only born in Russia. Then the President did not meet with the projects, the state did not allocate billions for innovation, there was neither FRIA, nor API Moscow, nor more than a hundred venture funds of different stages investing in IT. Everything was just beginning. At that time, we understood that investments seemed to be needed, but how and why to get them we did not know.
')
Anyway, we managed to attract more than $ 1,000,000 from various investors in 3 rounds and this gave invaluable experience, which says that it is still early to attract investments in our ticket system! Next, let's go through the points:
If someone has paid for what you are doing, this is at least some measure of the adequacy of the project. So we want to go this way to prove to ourselves the demand for the product, to better understand who is willing to pay how much. Understand the first channels and the cost of attracting customers. Finally, confirm our Business and Financial model .
Imagine 2 conversations. First: “Our Help Desk has 50 active users, 5 of which are paid customers with ARPU 3000 rub. There are at least 2 working channels for attracting customers, where CAC is 3,500 rubles. ”And the second:“ We have a prototype and 50 users, we don’t have any sales yet, and we don’t know how much for what. ” Which option do you have more credibility?
Excess money is always worse for a startup than their disadvantage is a fact. The current team of Timdesk has no experience in attracting investments, no experience in working with excess resources. When you have a couple of millions behind you, you can not wrestle with how to do something not for 100,000 rubles, but for 10,000 rubles. or for free. You can not focus on the most important thing, but try to do everything at once - that is, money!
When a company (team, product, processes) grows harmoniously with revenue, it turns out to form a skeleton or foundation for further rapid growth of the company. This path is ideal for Timdesk and his teams. Such companies are not afraid of crises or competitors.
But here I am only talking about a specific, our case. There are a million examples when experienced founders attracted a lot of $ at once and started them very efficiently. They knew what, how much and when they needed the money. They knew what to focus on right now and the resource in the form of an account with many zeros at the end worked as fuel for the rocket.
An incredible amount of energy and time is spent on attracting each round. Hundreds of letters, dozens of meetings, preparation of presentations, conducting Due Diligence, etc.
If we turn to the Parrett principle and such an approach, then right now we need to focus on finalizing the product to the first paid version and getting real money from customers. What we actually do!
Suppose if we now began to actively involve the round, then at best, after 3 months (objectively six months), we would see money in the current account. Another 1-2 months would be spent on hiring and incorporating programmers into the work, another month would be new functionality. Total in the best case, only in 4-6 months, our clients would see a return on this round. While the paid tariff with full focus on finalizing the product, we plan to launch in 1 month and see the first money from customers.
Such an approach will make it possible to receive revenues in the area of ​​several hundred thousand rubles in the same 4-6 months and to have sufficient resources for development without investment in principle.
In the current format, our help desk may well exist as an IP or LLC as a simplified one. All decisions can be made in 5 minutes and will not require bureaucratic documentation (protocols, approvals, etc.). For management reporting, the tablet will completely disappear in Excel, and the plan for the next month will be recorded in Google Docs.
Now imagine a situation when there is a fund among your shareholders. It is immediately at least an LLC, as a maximum offshore somewhere in Cyprus, BVI or Delaware. The signing of the simplest protocol will require coordination with the lawyers of the foundation, it will be signed by unhurried nominee directors in Cyprus, etc. This is good if you have a lawyer / assistant to whom you can download all this paperwork. And if not?
In general, each new participant in the project (founder) exponentially increases the time and number of communications for any action. And if you are "lucky enough" to take money from the state. Fund - lay another x2.
An investment project in most cases implies that it will either die, be sold, or go public. Few venture funds are interested in a stable profitable business that generates net income and dividends. Funds just work differently.
We are building from Timdeska a company that will create and will develop the best in Russia and the CIS ticket system for small and medium-sized businesses. Which will be profitable and will be number 1 on the market of Russia and the CIS. If there is something "innovative"? Unlikely. Will the fund of such a project be able to come out quickly and easily? Not sure.
If the investor still at the negotiation stage does not understand where he will be able to attach his share then he will not work. And the option, we will begin to pay dividends in a year or two - usually not interesting.
These are the main motives that still stop us from attracting investment. This does not mean that they will not be at all, it means that we do not need them at this time and in the current situation.
As of today, we have already received 3 proposals for investing in Timdesk from different investors, although the project started only a couple of months ago and did not earn a penny. We have not seriously considered any proposal. This may seem strange, especially when hundreds of start-ups are trying to get funding, but we have our own plan ...
When we just launched our first “adult” project 5 years ago, the industry of IT start-ups and venture financing was only born in Russia. Then the President did not meet with the projects, the state did not allocate billions for innovation, there was neither FRIA, nor API Moscow, nor more than a hundred venture funds of different stages investing in IT. Everything was just beginning. At that time, we understood that investments seemed to be needed, but how and why to get them we did not know.
')
Anyway, we managed to attract more than $ 1,000,000 from various investors in 3 rounds and this gave invaluable experience, which says that it is still early to attract investments in our ticket system! Next, let's go through the points:
1. The difference in the evaluation of a startup, when he has at least 1 client and 1000 rubles from clients and not - many times more
If someone has paid for what you are doing, this is at least some measure of the adequacy of the project. So we want to go this way to prove to ourselves the demand for the product, to better understand who is willing to pay how much. Understand the first channels and the cost of attracting customers. Finally, confirm our Business and Financial model .
Imagine 2 conversations. First: “Our Help Desk has 50 active users, 5 of which are paid customers with ARPU 3000 rub. There are at least 2 working channels for attracting customers, where CAC is 3,500 rubles. ”And the second:“ We have a prototype and 50 users, we don’t have any sales yet, and we don’t know how much for what. ” Which option do you have more credibility?
2. Investments corrupt
Excess money is always worse for a startup than their disadvantage is a fact. The current team of Timdesk has no experience in attracting investments, no experience in working with excess resources. When you have a couple of millions behind you, you can not wrestle with how to do something not for 100,000 rubles, but for 10,000 rubles. or for free. You can not focus on the most important thing, but try to do everything at once - that is, money!
When a company (team, product, processes) grows harmoniously with revenue, it turns out to form a skeleton or foundation for further rapid growth of the company. This path is ideal for Timdesk and his teams. Such companies are not afraid of crises or competitors.
But here I am only talking about a specific, our case. There are a million examples when experienced founders attracted a lot of $ at once and started them very efficiently. They knew what, how much and when they needed the money. They knew what to focus on right now and the resource in the form of an account with many zeros at the end worked as fuel for the rocket.
3. Investment is time we don’t have
An incredible amount of energy and time is spent on attracting each round. Hundreds of letters, dozens of meetings, preparation of presentations, conducting Due Diligence, etc.
If we turn to the Parrett principle and such an approach, then right now we need to focus on finalizing the product to the first paid version and getting real money from customers. What we actually do!
Suppose if we now began to actively involve the round, then at best, after 3 months (objectively six months), we would see money in the current account. Another 1-2 months would be spent on hiring and incorporating programmers into the work, another month would be new functionality. Total in the best case, only in 4-6 months, our clients would see a return on this round. While the paid tariff with full focus on finalizing the product, we plan to launch in 1 month and see the first money from customers.
Such an approach will make it possible to receive revenues in the area of ​​several hundred thousand rubles in the same 4-6 months and to have sufficient resources for development without investment in principle.
4. Investments are not only opportunities, but also many limitations
In the current format, our help desk may well exist as an IP or LLC as a simplified one. All decisions can be made in 5 minutes and will not require bureaucratic documentation (protocols, approvals, etc.). For management reporting, the tablet will completely disappear in Excel, and the plan for the next month will be recorded in Google Docs.
Now imagine a situation when there is a fund among your shareholders. It is immediately at least an LLC, as a maximum offshore somewhere in Cyprus, BVI or Delaware. The signing of the simplest protocol will require coordination with the lawyers of the foundation, it will be signed by unhurried nominee directors in Cyprus, etc. This is good if you have a lawyer / assistant to whom you can download all this paperwork. And if not?
In general, each new participant in the project (founder) exponentially increases the time and number of communications for any action. And if you are "lucky enough" to take money from the state. Fund - lay another x2.
5. We have different goals with investors.
An investment project in most cases implies that it will either die, be sold, or go public. Few venture funds are interested in a stable profitable business that generates net income and dividends. Funds just work differently.
We are building from Timdeska a company that will create and will develop the best in Russia and the CIS ticket system for small and medium-sized businesses. Which will be profitable and will be number 1 on the market of Russia and the CIS. If there is something "innovative"? Unlikely. Will the fund of such a project be able to come out quickly and easily? Not sure.
If the investor still at the negotiation stage does not understand where he will be able to attach his share then he will not work. And the option, we will begin to pay dividends in a year or two - usually not interesting.
These are the main motives that still stop us from attracting investment. This does not mean that they will not be at all, it means that we do not need them at this time and in the current situation.
Source: https://habr.com/ru/post/290164/
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