It is amazing to be in a start-up company – looking towards the future and planning how your new venture will change people’s lives for the better and be financially successful. It is amazing, but it is also very difficult – perhaps more difficult than it has to be. The question for today is what’s really more important in making investments – the idea or the returns?
I’m asking because from my experience of working with investors, I’ve made some observations that I’d like to explore. For example, ‘friends and family’ are the type of investors that seem to go with the idea and the founder – they buy in to the concept and the impact the new idea will have. Yes, they are interested in a return, but they are more about supporting a good idea. I have found that institutional investors are completely different.
Perhaps it’s the impact of Silicon Valley and the search for the next unicorn that has made investing in start-ups a numbers game. Is fast tracking of a product to as many consumers as possible to achieve an as quick a profitable exit as possible the optimal approach? Does this approach constrain investment in other types of ideas/technologies that take more time to develop, but that may be more important to society? Do we really need another food delivery app?