Why I just invested a 6-digit amount of money into my own startup
I am the founder of Good Hood GmbH, the legal entity running social neighbourhood networks nebenan.de (market leader in Germany) and mesvoisins.fr (market leader in France). We build hyperlocal social networks for neighbours, lowering the hurdle to meet the people living around you.
We just raised €16 million from corporate and financial investors Burda, Lakestar, Deutsche Tele Medien, NWZ and pd ventures. We will use the fresh funding to accelerate growth in existing markets, enter further European countries and develop & operationalize our business model.
I participated with a significant six-digit amount of my own money in this funding round and thus acted in a hybrid role: both as founder and investor.
I did this not because I had to, but because I choose to. Here’s why.
First of all, because I could. I was fortunate enough to have this opportunity. Through a combination of intuition, hard work, right timing and a lot of luck, I managed to build and exit successful companies before. This gave me the necessary means to make this investment. (I totally understand that not everybody finds themselves in this fortunate position.)
Secondly, because I have been investing into other founders as a Business Angel ever since 2005. I have made more than 70+ early stage investments since then and was recently named “German Business Angel of the Year 2017”. If I dare invest into others, why not back my own team?
Thirdly, because I hate hypocrites. I just cannot stand people who talk one way and act another. If you tell investors that you absolutely believe in your startup, why not put your money where your mouth is and invest some of your own?
Four, because I strive to be a good role model for my kids. What I try to teach them every day: It is perfectly OK to be afraid, to experience fear. It is your reaction to that feeling that makes the difference. Don’t be a coward that turns his back, but face your fear. Fortune favours the bold. How can I tell my kids to live by this principle but at the same time be too afraid to invest into my own startup?
Ultimately, I did it because I have never before in my life (I recently turned 40) had such a strong feeling of purpose. Being in the right place, doing the right thing at the right time with the right people — I just had to!
I can only encourage founders to do the same and double down on their own venture (be it with whatever amount they can spare). It comes with a few key advantages:
For one, it makes you have skin in the game and feel it. This helps to stay focused and strengthens your resilience — one if not THE ingredient for startup success.
Moreover, it helps to align interests with your investors. If founders invest their own money, everybody is in the same boat.
Most importantly, it is a strong positive signal to all stakeholders in your company, be it new and existing investors, co-founders, employees, job applicants, suppliers, partners, customers and the general public. It might well be the strongest - because most credible - signal one can send.
I know what I am talking about. In my first company, MyVideo, I was at times invested with what amounted to 80% of my total net worth back then. It certainly helped to keep me focused and make the company a success.
And oh boy do I want this company to succeed! Not just because it would give me a return on my investment, but even more so because we are on a mission here.
We aim to strengthen social cohesion in times where other social networks fail to assume responsibility and are turning into parasites on civil society.
We lower the hurdle to interact with the people that live in your immediate vicinity. In other words: We make it easier for you to take the first step towards meeting your neighbours in real-life. This helps not only the lonely, the introverted and the old but just about everybody else to reach out and help themselves.
I have a dream!
I encourage you to dream with me and imagine for a second that a different form of social network is possible.
Picture this: A chronological newsfeed from your neighbourhood. Refreshingly low-tech. No algorithm decides who gets to see what.
No filter bubble.
A rigorous address verification process ensures only people who live in the neighbourhood can join. Posts are not made available outside the platform.
A strictly enforced “full clear name” policy means people actually think twice before they post & take responsibility for how they communicate.
It connects people that share the same neighbourhood but were not in contact before. The vast majority of interactions between its users would simply not happen without it. A large percentage of those digital interactions lead to real-life encounters. It thus creates a whole new category of communication and transaction. It enables serendipity on a large scale.
Short distances between neighbours save time, energy and resources when sharing, borrowing, helping and meeting each other (often spontaneously).
This network leads to more time spent offline (aka “in the real world”) —
as oposed to sucking ever more of our attention into the digital ether (like a highly addictive instant gratification engine exploiting our human weaknesses would).
It sees people interact across different generations, social strata and origins. Its users are indeed exposed to diverging opinions and perspectives and actually talk to each other instead of about each other.
A local community where the voice of the reasonable, soft-spoken majority does not get crowded out by the noise of loud, agitating fringes.
A place for empathy, positivity, altruism and civil engagement, not for “me, myself and I” vanity and fake news.
We at Good Hood believe a social network like that would strenghten social cohesion within our local communities and hold the key to solve a lot of the challenges our modern democratic societies are facing today.
This is the type of local social network we are buidling.
We are dedicated to willing it into the world and do everything it takes! Including investing own, hard-earned cash…
AND to my truly supportive and absolutely wonderful wife (who showed a lot of patience towards me during the last few months). Thank you so much, Nina!
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