The art of investing
Lecture of the head of Mangrove company David Warcoyer for students of the specialization “Management in the field of Internet technologies” .
At a certain stage of development, most Internet projects require material investments from outside. Attracting such investments is not an easy task: for this, the project organizers need to make investors believe in the success of this project. Mangrove Capital Partners (Mangrove) , whose successful projects include such a successful service as Skype, is one of the investment companies that invest their money in Internet projects at the earliest stages of their development. Mangrove manager David Waroquier talked about the art of online investing and the investor perspective on the development of start-up projects.
The area of special interest of Mr. Warquier is Russia. Therefore, in his presentation he paid a lot of attention to discussing the specifics of investing in Russian Internet projects.
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“Why are we interested in Russian projects?” When we first invested in one of the Russian projects, we realized that in your country there are very few companies professionally involved in investing in high-tech projects in the initial stages of development. Therefore, we decided that investment in this country would be profitable for us. At the same time, our decision was also influenced by the territorial and cultural proximity of Russia to Europe. When we analyze Russian Internet companies, we understand that there is a huge Russian-speaking audience, a huge market for Russian Internet projects. And we believe that in the next 10 years a number of large-scale successful projects will be launched in Russia. Of course, Russia has its own specifics. Therefore, we are working with our Russian partner - ABRT Venture Fund, whose management thinking is close to our way of thinking, and in which the features of the Russian market are well understood.
Every month we review a large number of projects and organize a meeting with startups. Personally, I travel to Russia for this reason every month. Therefore, if you have a good offer for us, send me a business plan and we will analyze it. ”
“Now I would like to discuss with the audience several topics related to the development and investment of projects,” Mr. Varocueur proceeded to discuss general issues of the management of Internet projects. - “How is a startup created? For each startup organizer there are many motives and at the same time many obstacles for the creation and development of their project. In any case, in this situation, your destiny is in your hands. You either win or not. The main thing is that you create something that does not exist yet, change the world around you. For example, one of our latest projects is the American company Zink, which produces special paper that allows you to print without applying paint. This project started in June, but every day more and more electronic devices supporting Zink technology are being produced for the market - mobile printers, cameras, and cell phones. You, owning a startup project, can also create your own company and have the opportunity to earn a lot of money on this. But on the way you will find many obstacles that may prevent you. It is necessary to understand that the organization of the statapas is a very emotional type of activity: one day you are on a horse, the other is in deep depression. A start-up starter is surrounded by a multitude of “no” that will accompany you everywhere, at every step.
Unlike a large company, startups usually do not have a well-established structure. My opinion - it is very important to create clear rules for the company from the first day of its existence. One of the most serious obstacles is the recruitment team. When you recruit your first project team, experience suggests that between 25 and 50 percent of all the people you recruit will be unsuitable for work. And in order to optimize performance, you will have to fire a part of the specialists you hired - this is also the responsibility of the project organizer. Otherwise, even one such employee will negatively act on the whole team. If you are going to organize your startup, you should be aware that it will take a lot of your personal time, your evenings, your weekends. ”
Further, Mr. Warwoker went on to describe the vision of start-up projects from investors evaluating them.
“We consider many plans in similar subject areas and practically do not see the difference between them. But in your hands to do something that distinguishes your project from other, similar projects.
I would like to tell you how we, the investors, see our projects. First, I want to tell you, if you heard a “no” from the investor once - it means nothing. You can begin to doubt on the fifth "no." Although it is always important to understand whether this “no” was real, and what it really meant. Many investors will not explain to you the reasons for refusal. According to our policy, we always try to explain why we refuse projects to invest.
We consider a business plan as an onion from which to remove the husks. When you yourself remove this husk, which is called "risks", you increase the chances that your project will appeal to investors. Of course, we understand that it is impossible to do without risks. In your power only to reduce them. What is included in the "husk" of risk? In the early stages of investing, 60 percent of projects are rejected by us because of the composition of the project team. We look at those who will be involved in the project, we evaluate them. Sometimes we can set the condition to exclude someone from the team. For example, to exclude a wife or husband from a family business, if he or she does not have the corresponding position of a professional level. Afterwards, we assess the market situation and the strategy of promoting the company in the market. Determine whether the market is able to accept this product. It is very important to choose the right time to enter the market. Here you can both be late and hurry. For example, for the Skype project, the time was chosen almost perfectly, because just at that time there was a significant increase in IP telephony users due to the wide penetration of computers, the Internet and broadband access. At the same time, the founders of Skype were the main engines: they had a clear vision, which they implemented day after day, analyzed the situation and made the necessary changes to the product. ”
“What is more important for a startup: team, product or market? What is more dangerous: a weak team, a weak product or a weak market? ”Mr. Varocueer addressed the audience. After listening to all the variants of the audience, he remarked: “I would say - the market. If you have the best team and a great product, but the market is not developed, then you will be tormented for a long time trying to develop, but in the end, your company is doomed. ”
Separately, Mr. Warwoker touched upon the topic of interaction of startups with large companies.
“Big companies do not want someone new to occupy significant market shares, and are buying up successful companies. For statatov, sometimes it is very tempting to work, to enter into partnership agreements with a large company. We say: “never make the success of your company depend on large companies, you have to attract your first users and clients yourself ... Do not lose all your energy to do business with big players and do not forget about the initial priorities of your company”. Of course, I have nothing against big companies, but you should be careful with them. ”
Further, Mr. Warwoker illustrated his idea with the example of Skype, whose organizers came to them only with a piece of paper and were able to evolve in a few years to the largest player in their market. Tips for discussing projects with investors, of course, were useful to the audience.
“How much investment do you need to ask an investor? In general, this is a question of the golden mean: you can ask for too little or too much. Therefore, before you go to the investor, you must clearly understand how much money you need to implement your project. If you ask for a little, you will have to ask again. This will not only take your time and energy that you could spend on developing your business, but it may be unsuccessful - the window for issuing money will already be closed. My advice: when you ask us for an investment, ask for a little more than you need according to your estimates. However, remember that if you ask for much more than necessary, you can be left without your own company's stock. In general, the more you require investment, the smaller your share in the profit from the realized project will be if it is successful.
People often ask what a business plan should be in order for us to like it. Should this be a huge document with 100 pages of text? I recommend to make a business plan so that its volume does not exceed 15-20 pages. We annually process a huge number of business plans, so you can get a refusal just because your business plan is too verbose. But at the same time, of course, you must fit into it all the most important about your project, your vision of the project. ”
In conclusion, Mr. Warwoker told about Mangrove and the company's experience in Russia.
“Mangrove is engaged in investment projects in Europe, the USA and Russia. Although the company's staff consists of only 8 experts, we annually analyze about 1000 projects. We have been working in the Russian Federation for about 4 years and have learned a lot of lessons on working in the local market. There are a lot of good ideas and ideas. However, in the field of Internet technologies, we see many projects that duplicate Western ones. Therefore, it is important for us to understand what kind of innovation is proposed in your project. Often, business plans of Russian companies lack a description of a specific marketing promotion policy, requirements for a project team, consideration of ways to monetize projects. Another feature of the Russian market of Internet projects is that companies sell here too soon. For us, the projects whose owners want to sell them as quickly as possible are not interesting. ”
Mr. Warwoker also answered a number of questions from the audience.
- What guarantees do you provide to startups in terms of the fact that the idea that they describe in the business plan submitted to you will not be used by you without their knowledge?
- None, except our reputation. We cannot physically enter into a confidentiality agreement for each business plan we receive.
- What kind of startups are you interested in in Russia?
- We are interested in revolutionary technological projects in the field of software development, the Internet, online media or applications for mobile devices. We are not inclined to invest in projects in overcrowded market segments (like social networks), unless they prove that they have real differences from analogs and innovative potential. In the area of our interests projects related to e-commerce, technology and applications for the Internet.
- How does the foundation interact with the startup after the conclusion of the contract?
- We are a company that keeps abreast of what is happening. We are constantly present in the affairs of the company and we can discuss the strategy at least every day. At earlier stages of development, we spend more time than at stages when the company has already developed enough.
At a certain stage of development, most Internet projects require material investments from outside. Attracting such investments is not an easy task: for this, the project organizers need to make investors believe in the success of this project. Mangrove Capital Partners (Mangrove) , whose successful projects include such a successful service as Skype, is one of the investment companies that invest their money in Internet projects at the earliest stages of their development. Mangrove manager David Waroquier talked about the art of online investing and the investor perspective on the development of start-up projects.
The area of special interest of Mr. Warquier is Russia. Therefore, in his presentation he paid a lot of attention to discussing the specifics of investing in Russian Internet projects.
')
“Why are we interested in Russian projects?” When we first invested in one of the Russian projects, we realized that in your country there are very few companies professionally involved in investing in high-tech projects in the initial stages of development. Therefore, we decided that investment in this country would be profitable for us. At the same time, our decision was also influenced by the territorial and cultural proximity of Russia to Europe. When we analyze Russian Internet companies, we understand that there is a huge Russian-speaking audience, a huge market for Russian Internet projects. And we believe that in the next 10 years a number of large-scale successful projects will be launched in Russia. Of course, Russia has its own specifics. Therefore, we are working with our Russian partner - ABRT Venture Fund, whose management thinking is close to our way of thinking, and in which the features of the Russian market are well understood.
Every month we review a large number of projects and organize a meeting with startups. Personally, I travel to Russia for this reason every month. Therefore, if you have a good offer for us, send me a business plan and we will analyze it. ”
“Now I would like to discuss with the audience several topics related to the development and investment of projects,” Mr. Varocueur proceeded to discuss general issues of the management of Internet projects. - “How is a startup created? For each startup organizer there are many motives and at the same time many obstacles for the creation and development of their project. In any case, in this situation, your destiny is in your hands. You either win or not. The main thing is that you create something that does not exist yet, change the world around you. For example, one of our latest projects is the American company Zink, which produces special paper that allows you to print without applying paint. This project started in June, but every day more and more electronic devices supporting Zink technology are being produced for the market - mobile printers, cameras, and cell phones. You, owning a startup project, can also create your own company and have the opportunity to earn a lot of money on this. But on the way you will find many obstacles that may prevent you. It is necessary to understand that the organization of the statapas is a very emotional type of activity: one day you are on a horse, the other is in deep depression. A start-up starter is surrounded by a multitude of “no” that will accompany you everywhere, at every step.
Unlike a large company, startups usually do not have a well-established structure. My opinion - it is very important to create clear rules for the company from the first day of its existence. One of the most serious obstacles is the recruitment team. When you recruit your first project team, experience suggests that between 25 and 50 percent of all the people you recruit will be unsuitable for work. And in order to optimize performance, you will have to fire a part of the specialists you hired - this is also the responsibility of the project organizer. Otherwise, even one such employee will negatively act on the whole team. If you are going to organize your startup, you should be aware that it will take a lot of your personal time, your evenings, your weekends. ”
Further, Mr. Warwoker went on to describe the vision of start-up projects from investors evaluating them.
“We consider many plans in similar subject areas and practically do not see the difference between them. But in your hands to do something that distinguishes your project from other, similar projects.
I would like to tell you how we, the investors, see our projects. First, I want to tell you, if you heard a “no” from the investor once - it means nothing. You can begin to doubt on the fifth "no." Although it is always important to understand whether this “no” was real, and what it really meant. Many investors will not explain to you the reasons for refusal. According to our policy, we always try to explain why we refuse projects to invest.
We consider a business plan as an onion from which to remove the husks. When you yourself remove this husk, which is called "risks", you increase the chances that your project will appeal to investors. Of course, we understand that it is impossible to do without risks. In your power only to reduce them. What is included in the "husk" of risk? In the early stages of investing, 60 percent of projects are rejected by us because of the composition of the project team. We look at those who will be involved in the project, we evaluate them. Sometimes we can set the condition to exclude someone from the team. For example, to exclude a wife or husband from a family business, if he or she does not have the corresponding position of a professional level. Afterwards, we assess the market situation and the strategy of promoting the company in the market. Determine whether the market is able to accept this product. It is very important to choose the right time to enter the market. Here you can both be late and hurry. For example, for the Skype project, the time was chosen almost perfectly, because just at that time there was a significant increase in IP telephony users due to the wide penetration of computers, the Internet and broadband access. At the same time, the founders of Skype were the main engines: they had a clear vision, which they implemented day after day, analyzed the situation and made the necessary changes to the product. ”
“What is more important for a startup: team, product or market? What is more dangerous: a weak team, a weak product or a weak market? ”Mr. Varocueer addressed the audience. After listening to all the variants of the audience, he remarked: “I would say - the market. If you have the best team and a great product, but the market is not developed, then you will be tormented for a long time trying to develop, but in the end, your company is doomed. ”
Separately, Mr. Warwoker touched upon the topic of interaction of startups with large companies.
“Big companies do not want someone new to occupy significant market shares, and are buying up successful companies. For statatov, sometimes it is very tempting to work, to enter into partnership agreements with a large company. We say: “never make the success of your company depend on large companies, you have to attract your first users and clients yourself ... Do not lose all your energy to do business with big players and do not forget about the initial priorities of your company”. Of course, I have nothing against big companies, but you should be careful with them. ”
Further, Mr. Warwoker illustrated his idea with the example of Skype, whose organizers came to them only with a piece of paper and were able to evolve in a few years to the largest player in their market. Tips for discussing projects with investors, of course, were useful to the audience.
“How much investment do you need to ask an investor? In general, this is a question of the golden mean: you can ask for too little or too much. Therefore, before you go to the investor, you must clearly understand how much money you need to implement your project. If you ask for a little, you will have to ask again. This will not only take your time and energy that you could spend on developing your business, but it may be unsuccessful - the window for issuing money will already be closed. My advice: when you ask us for an investment, ask for a little more than you need according to your estimates. However, remember that if you ask for much more than necessary, you can be left without your own company's stock. In general, the more you require investment, the smaller your share in the profit from the realized project will be if it is successful.
People often ask what a business plan should be in order for us to like it. Should this be a huge document with 100 pages of text? I recommend to make a business plan so that its volume does not exceed 15-20 pages. We annually process a huge number of business plans, so you can get a refusal just because your business plan is too verbose. But at the same time, of course, you must fit into it all the most important about your project, your vision of the project. ”
In conclusion, Mr. Warwoker told about Mangrove and the company's experience in Russia.
“Mangrove is engaged in investment projects in Europe, the USA and Russia. Although the company's staff consists of only 8 experts, we annually analyze about 1000 projects. We have been working in the Russian Federation for about 4 years and have learned a lot of lessons on working in the local market. There are a lot of good ideas and ideas. However, in the field of Internet technologies, we see many projects that duplicate Western ones. Therefore, it is important for us to understand what kind of innovation is proposed in your project. Often, business plans of Russian companies lack a description of a specific marketing promotion policy, requirements for a project team, consideration of ways to monetize projects. Another feature of the Russian market of Internet projects is that companies sell here too soon. For us, the projects whose owners want to sell them as quickly as possible are not interesting. ”
Mr. Warwoker also answered a number of questions from the audience.
- What guarantees do you provide to startups in terms of the fact that the idea that they describe in the business plan submitted to you will not be used by you without their knowledge?
- None, except our reputation. We cannot physically enter into a confidentiality agreement for each business plan we receive.
- What kind of startups are you interested in in Russia?
- We are interested in revolutionary technological projects in the field of software development, the Internet, online media or applications for mobile devices. We are not inclined to invest in projects in overcrowded market segments (like social networks), unless they prove that they have real differences from analogs and innovative potential. In the area of our interests projects related to e-commerce, technology and applications for the Internet.
- How does the foundation interact with the startup after the conclusion of the contract?
- We are a company that keeps abreast of what is happening. We are constantly present in the affairs of the company and we can discuss the strategy at least every day. At earlier stages of development, we spend more time than at stages when the company has already developed enough.
Source: https://habr.com/ru/post/45975/
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