When to ask for Investments

First of all and before I say anything, I just want to take you in a small trip back in time where we (me and Hala) lunched our start-up Msrofi .

At that time everyone thought it was a good idea, but we forget one important things that nice ideas need money. So few years later we had to close the project and even when we tried to get investors to invest in the project ( in 2013 ) they though its not ready yet.

Now lets talk about Investors and do we really need them, In my opinion if you have a good amount of money which will let you create a stable business and valuable product then try to stay away from Investors, dont try to go to them let them come to you, and when I say a stable business I mean:

  1. Good and talented technical team.
  2. Good money income which cover some of your expenses, or lets say a stable money flow.
  3. Good plan for a steady growth.

Having one of those or even two out of three from those points will not be good enough for you to keep your business up and running, and if you do you may fall into the gab where you will need to let one of those points slip out of your plans.

So when is the good time to ask for investments or even try to reach Investors, to be honest no one will ever give you a good answer to this question, each one of us has his own opinion about this topic, one will tell you to get investments from the start and before you start cause you know its more easy to burn VC’s money than burning your own money, others will tell you that you cant reach VC’s with only ideas cause Ideas are cheap mean while execution is hard, and finally you will find those who will tell you get money when you need and you cant find any better source.

Am some how with the last option, cause to be honest when you will get investors aboard you will lose some of the shares you hold, cause they need something in return, they will not just give you the money for free, and trust me they wont get a small share, especially if you are in a bad situation and you are desperate for the money. Any investor will start by simply evaluate your company, your work and the income which you currently have, if they found that the idea is good but the execution is bad they will try to squeeze you as much as they can which will lead to give you a lower evaluation to your project and so the money you will have will get a big bite from your shares.

Now what if you have a good idea, but you need money to expand your team or even to expand your market, this might be a different situation cause they will evaluate the future of the product not the current status, since they will keep in their mind that you are doing your best in the budget you have, but thats if and only if they see that you can manage the project in a responsible way.

So just to make it simple and cut most of the words I have in my mind, sometimes its so easy to ignore the investors and just keep doing your work, but if you find that you are facing too many difficulties and that you cant keep up and make sure that your team can work without too much pressure you may need to accept one of two options either to keep struggling or search for investors even if you got a small bite from your project cause otherwise your project may close sooner or later and you will lose even the money which you have already invest in the project ( which is something happened to us sadly, we lost the project and when we reached the investors it was too late, but we learned our lesson :D ).

Filed under: Business

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