This article is written by Clinton James, a Contributor Author at Startup Istanbul.
Asra Nadeem is a venture capitalist and Vice President of DraperU, she heads the Entrepreneurial Programs at Draper University, where she designs and implements curriculums to build and grow startups tackling the world’s most intractable problems. Asra has over 15 years of experience with product and market development for startups in the Middle East, North Africa, and South East Asia. She was present at Startup Istanbul 2017, she shares her thoughts during the event in an interview with us.
Asra Nadeem speaking to Startup Istanbul’s audience as a partner of an Early Stage Fund called Draper University Ventures suggests that investors should always ask some important questions like how the founder built the company, why the particular choice of business, what they have done, how are they committed, chances of succeeding in the business and in life, and what does winning look in terms of revenue and returns.
It is important how the founders are going to deal with matters related to domain, management, operating and startup experience/knowledge, their passion, integrity, temperament, leadership, commitment, pragmatism and flexibility. Ensure that the founder should be able to do most of these things themselves.
Pre-traction clients have no users or revenue, and an investor can come in to help push for marketing of the product to get clients. Be cautious not to get in too early. 98% of business plans have a negative growth rate. Have an assessment of the companies that approach you, have the company name, rating, comment, second round comment and the six month findings.
Have your deal memos as they guide you to know why you’re doing something and to help justify the reasons why you did it. Never say “NO”, but instead, “You’re not ready yet, Please stay in contact, email and update me on your progress.” Most unserious companies fall off! Most initial pipelines should go on email to save time.
People are scared of sharing good deals, yet that is how the best entrepreneurial ecosystem places like Silicon Valley started. While investing and trying to de-risk yourself, at the same time, you are creating an environment where entrepreneurs strive, develop and earn in the long run to make more wealth.
For the ones you say yes to, keep track of the entrepreneurs and keep updating it. Year two is when most companies you’ve invested in begin to run out of runway or money. Serious founders would be looking to raise another bigger round at the time. If a company has failed drastically in two years while you’ve been helping and standing with them, don’t try saving it, it would be your pitfall. Invest on those with a growth trajectory instead and don’t fight the lost battles.
If you have monitored the success of their growth, help them close their round, help them succeed and build partnerships while you’re at it. Meet at least two other people in your networking event. They would be the ones to help you in the future.
Having a good relationship with the founder, they would be in a good place to assist. When pricing the second round, get to know why and how much would be required so as to help raise it. Have consistent communication updates with the founder and most importantly find out if they will be sending you your revenue since inception by quarterly, monthly, weekly or daily. Finally ask for their monthly profit and loss statement and talk to their external accountant.