Today I read an interesting note on the topic of investment statistics.
Called "7 refusals of investors, who heard the creators of Airbnb in 2008":
As Brian Cheski points out, at that time the team was looking for someone who would agree to buy 10% of the company for $ 150,000, that is, the startup estimate would be $ 1.5 million. Now the service is rumored to beestimatedat $ 25.5 billion. Cesky writes that all the investors to whom the team introduced the service are "very smart people", and Airbnb did not really make a strong impression then.
Here that is interesting, if to analyze traditionally sounded reasons, the majority of them looks as refusal of the investor for "own" reasons. That is, for reasons related to it. For example - "this is not the sphere where we focus" or "the scope does not belong to any of our target markets."
That is, the main reasons for denying one of the most popular services at the moment are disinterest in the sphere, the market.
And then I see 2 obvious and one unexpected solution.
1. Fixing preferences of investors.
Investors should only offer start-ups from their own industries. That is, beforehand to limit the possibility of investing in "foreign", not marked by the investor industry. This will technically reduce the number of failures due to "not that industry".
2. Definition of the project industry from the startup side.
A clear narrow definition of the sphere. For investors to understand what is at stake.
Again - technically the number of refusals of "non-core" investors will decrease.
3. Forcing the multisphere of start-ups.
To make compulsory registration of a start-up in several industries, thus expanding both the opportunities to attract investors' attention from other markets, and the opportunity to present the project "from a different angle."
If belonging to another industry will have to be justified, the startup will have to think about this topic. And this can give a significant advantage for development.
I disagree with the idea to attract particular attention of investors to the industries (or areas of activities) of startups.
Yes, today it does matter to investors. But itbis verybbad because it means that future Airbnb has a very little chance to attract investors
And we need to promote Boostr as a place where the chance to meet a new Airbnb is very high
So in my opinion the message for potential investors should be the following: Maybe our startups are not from "popular today industries"' but they are from "popular tomorrow industries". So don't think about their industries, think about their potential
Helping with the orientation in the future's market Boostr would show it's competence in this theme and it's basic compatitive to take just an idea and make the GREAT COMPANY "from tomorrow".
So the plan is - to create new markets and introduce startups in this context!
The plan is to open the doors to absolutely all startups from different industries. This includes the "industries of tomorrow", but also includes new edition of the industries of yesterday. For instance Uber changed completely the taxi industry. 10 years ago nobody could predict that taxi can become new and innovative industry again.
But it is not true that only 2 startups of 10 are interesting for investors
The truth is that it is absolutely unknow what percentage of startups are interesting for investors because nobody was able to present at least one startup to all investors in the world
Let me use again the example with supermarket. You have 1000 products in you supermarket. How may products in your supermarket are interesting for buyers It depends on number of buyers
If you have 1 buyer you will be able to sell perhaps 5 or 6 products. If you have 10 buyers you will sell say 50 products. If you have 100 buyers you will sell say 300 products etc.
The same is in the situation with investors and startups. In accelerators the number of investors (buyers) are very small (severel dozens) thats why only 10-20% of products (startups) are sold.
Boostr is planned to be the "largerst supermarket of startups" in the world, because Boostr's startups will be presented not to 20 or 30 investors in one place but to (hopefully) hundreds or thousands of investors in different locations (London, New York, Bangalore, Moscow, etc.) simultaneously. And if we manage to do it not 20%, but probably 30 or 40 or even 50% of startups will be "sold" to "buyers"(investors).
So the first aim (and the first task) is to attract as many investors to our "supermarket of startups" as possible. Perhaps we need to attract also some people who have enough money but didn't invest in startups before. In this case Boostr will help to create a new type of investors.
The second aim (and the second task) is to create inside our "supermarket of startups" specail atmosphere helping investors to buy "the startup of their dream". In traditional supermaket it depends on "special offers and actions". Perhaps we need also to think about "special offers and actions" for investors in Boostr
In traditional supermarkets it depends on behavior of the staff - and we need to think how the staff of Boostr should communicate with the customers (investors)
So I think that we should use the experience of retail trade in order to make our "supermarket of startups" more successful and in order to increase the share of successful deals between founders of startups and investors.
When I talk about "2 of 10", I mean that there is statistics which exist now.
If Boostr would be able to attract thousend and millions of investors, it goes without saying that not 2, but 20 or 200 (or 2000 : ) startups would get money.
But.
I think that failure statistics should stay constant without development of the quolity of proposal (project demonatration) and the mechanism of connecting investors and startups.
In the exampe with the supermarket: after growth of shopping areas all the customers would bue more products. But also it means that there would be a greater number of products. So it would be slill 6 SKU on a 1 person.
I'm sure that just quality transformations in able to change statistics!
There are no relevant statistics now! Because in some accelerators only 5% are receving investments, but in some - 20%.
So we don't have the statistics of attrativeness of startups, we have the statistics of effectiveness of accelerators.
However we have made a very important conclusion that we need to use the technologies of retail trade in Boostr.
We can't change the nature of startups but we can change the format of presentation of startups plus number of buyers (investors,) in our "supermaket of startups".
Perhaps we can't predict the future statistics exactly but if we increase the number of buyers and format of presebtation we will get better results anyway.
So I would suggest to think how we can use the experience of retail trade to develop an action plan for Boostr.
Now I see that the essence of idea was successfully explained :-)
It's true that "we can change the format of presentation of startups plus number of buyers (investors)". And I'm sure that this approach has a perspective.
Compration with retail can give an occasion to adapt high-developed technologies from one sphere to another. It gives a great effect usually!
It looks like a challenge to increase an average cheak.
So we need to think about the format of presentation. It it the first new problem.
Another problem is to determine what exactly tools from retail trade could be used in our case. Maybe we can invite some professionals from retail trade to become our experts
In majority of cases the majority of startups do not receive any feedback
Just imagine that you are in a big room where 10-15 startups have 10 minutes to present their projects. After that 1-2 startups will get the invitation from investors to start negotiations. All others will get no feedback at all.
Generally agree with the explanation of Michael. One clarification: at such meetings (this is pitching) investors' time is so highly valued, that 10 minutes will not ne available to anyone - 5 minutes is too much. 2-3 minutes - that's what is really provided for the presentation. From my own real experience - very well done video presentation explaining the core of business - was as short as 2 min 10 s/ Text was minimum -all was understandable without words/ This is what helped to bring result, to get invitation for live meeting with investors.
I think that it is absolutely unreal. I suppose that investors are not able to explain why they are not investing in some startups.
Just imagine that you come to supermarket. You see say 1000 different products, but you buy only five: cheese, butter, tomatos, beef and apples. Are you able to explain why you didn't buy 995 other products? You just don't have enough motivation to buy them and that's all. And in the "supermarket of startups" the situation is similar.
Is there any complete certainty that they called the true reason for the refusal - I do not have the sogacity, but there are big doubts. They say something neutral - it's easier.
Indeed, if you follow the link, it will be clear that each time a set of reasons was called. But only 1 reason was voiced every time. And this reason is precisely the "non-profile" of the industry.
This is approximately like trying to get a job - the vacancy "Lawyer" is open (in our case, a certain amount is allocated to finance an IT start-up), and an accountant (in our case, a travel company) comes to this post.
The probability of not getting money increases at times, if not those go not to those.
The bottom line is that it is much easier to connect the connected.
We are looking for a startup with such parameters, we find it - we finance it.
I think that it is a very big difference when are a hiring an employee and when are you investing in startup.
You always know that you need say a lawyer with for this particular kind of job.
But when are you investing in startup the only criteria in 90% of cases is the successful exist after five years. Nothing can make you absolutely sure that you will have this successful exit.
And, maybe, it is necessary to completely forget about investing and remembering about retail trade
All the investment statistics that existed so far were based on completely different principles of work with start-ups, rather than it is assumed in Boostr. Boostr is a huge store selling startups.
Maybe, somehow tighten the statistics of the sale of goods in stores. Maybe in global stores (online stores) such as Amazon
In general, I think that Amazon can be a benchmark for Boostr
Support+0
Crowdinvesting as a tool to improve the statistics of investments
My post is based on Olga's idea to use crowdfunding (crowdinvesting).
If Boostr manages to arrange crowdinvesting in addition to "normal" investments it will increase the percentage of startups receiving the investments with a help of Boostr.
So it sounds as a very promising idea. But we need to develop an action plan for its implementation.
Support+0
Clarification of the issue: compared with what increase the frequency of investment?
What steps can be taken toincrease the frequency ofinvesting in start-ups Boostr in the first six months after the launch of the project?
It is required to understand in comparison with what it needs to be increased. If compared to what was before the beginning of work, that is, with zero, it is enough to attract investments for one startup. And if not, then with what to compare, what should it be, this frequency? It seems to me that Tatiana had a similar question about the word "convincing" in the formulation of the name of the question
There are no refusals as such. Investors are coming to see the presentations of startups. And they invest only in those startups which seems to be the most promising to them.
The same as when are you coming to supermarket. You are not buying all products, only those you like/ you need.
So from this point regional venture centers mean a great advantage - Boostr will deal with investors of different nationalities and they might have different priorities or preferences.
Support+0
Competition between regional venture centers as a tool to improve the statistics of investments
I think that the severe competion between regional venture centers can help to increase the share of startups received investments. This share should be the main KPI for venture centers and venture centers in Moscow, London, Hong Kong, etc. should compete with each other in order to rearch the highest indicator.
The competition will lead to new tools for attraction of investors and for more efficient presentation of startups.
It is important to understand how many venture centers will function in the first half of the year after the opening.Do you have such information? If it will be one or two, which is very likely, then probably there is nothing to discuss here
It is very difficult to think on this topic in this way - without context)
The fact that there are 10 regional centers in all key financial centers will already be a significant advantage and will allow you to generate investment statistics.
As for how to make statistics better - probably, you need to improve the statistics after some work has been done.
Otherwise, the goal would be to put it better in some kind of "clear currency" - for example, how to get a million dollars of investment in the first month or how to make it invested in every third startup.
It means that Boostr should have at least 100 startups on the day one and at least 20 of them should attract investments during first half a year.
It is no time to improve anything. It is necessary to show significant results in first 6 months.
Otherwise new startups will never come to Boostr again, they will continue to come to accelerators or will try to attract investors themselves.
But in order to attract first 100 startups (100 is absolute minimum, otherwise the system will not work) we need to have very strong "selling arguments" proving that the share of startups within this first group of 100-150 companies able to attract investments will be very high.
I think that the competition between 10-15 regional venture centers is a good argument. Competition will force every center to find the most creative way to attract investors and to work as hard as possible.
And the best venture center (with the highest % of startups received investments) should get a very solid bonus.
Support+0
I ask for help in the interpretation of the word "convincing" in this context.
We need to get the statistics (and statistics is the key word, i.e. we need to get figures) proving that the chance for startups to receive investments via Boostr is much higher that to get investments via accelerators of other tools.
That means that we need to suggest additional meausures which would be able to improve the future statistics. And the task is to think up these measures.
Still clarification: who will be investors? Professional investors or croweding?
And, perhaps, someone has information about what is the average investment on conventional platforms? And, kstati, what is this usual platform (share links)?
It could be any investors: individuals, corporates, private equity funds, venture capital fuunds, business angels, etc.
I would not call it platform, I think that Boostr is a service. It is very important because in this business model not start-ups are attracting investors themselvesbut regional venture centers of Boostr located in different parts of the world are responsible for attracting investors for participating start-ups.
And it is the one of the main differences between Boostr and accelerators. Accelerators represent traditional approach, Boostr represents a very new approach. Perhaps the most famous accelerator is Y Combinator (http://www.ycombinator.com/)
Thanks to regional venture centers it should be possible to attract more investors. But our task is to find something additional which can help to compete with acceleratos even more successfully.
You can create a new topic in the form below.
What steps can be taken to increase the frequency of investing in Boostr startups in the first six months after the launch of the project?
Today I read an interesting note on the topic of investment statistics.
Called "7 refusals of investors, who heard the creators of Airbnb in 2008":
As Brian Cheski points out, at that time the team was looking for someone who would agree to buy 10% of the company for $ 150,000, that is, the startup estimate would be $ 1.5 million. Now the service is rumored to beestimatedat $ 25.5 billion. Cesky writes that all the investors to whom the team introduced the service are "very smart people", and Airbnb did not really make a strong impression then.
Full text here: https://vc.ru/9232-chesky-7-rejections
Here that is interesting, if to analyze traditionally sounded reasons, the majority of them looks as refusal of the investor for "own" reasons. That is, for reasons related to it. For example - "this is not the sphere where we focus" or "the scope does not belong to any of our target markets."
That is, the main reasons for denying one of the most popular services at the moment are disinterest in the sphere, the market.
And then I see 2 obvious and one unexpected solution.
1. Fixing preferences of investors.
Investors should only offer start-ups from their own industries. That is, beforehand to limit the possibility of investing in "foreign", not marked by the investor industry. This will technically reduce the number of failures due to "not that industry".
2. Definition of the project industry from the startup side.
A clear narrow definition of the sphere. For investors to understand what is at stake.
Again - technically the number of refusals of "non-core" investors will decrease.
3. Forcing the multisphere of start-ups.
To make compulsory registration of a start-up in several industries, thus expanding both the opportunities to attract investors' attention from other markets, and the opportunity to present the project "from a different angle."
If belonging to another industry will have to be justified, the startup will have to think about this topic. And this can give a significant advantage for development.
My post is based on Olga's idea to use crowdfunding (crowdinvesting).
If Boostr manages to arrange crowdinvesting in addition to "normal" investments it will increase the percentage of startups receiving the investments with a help of Boostr.
So it sounds as a very promising idea. But we need to develop an action plan for its implementation.
To answer this question:
It is required to understand in comparison with what it needs to be increased. If compared to what was before the beginning of work, that is, with zero, it is enough to attract investments for one startup. And if not, then with what to compare, what should it be, this frequency? It seems to me that Tatiana had a similar question about the word "convincing" in the formulation of the name of the question
The competition will lead to new tools for attraction of investors and for more efficient presentation of startups.
I believe that we are looking for a solution, a key characteristic of the latter - namely, "credibility".
Who should be persuaded?
What should I convince?