Meeting recap
Iratel Ventures Breakfast Series #24
We hosted a gathering of local and global entrepreneurs, investors and active ecosystem players at Iratel Ventures Breakfast Series event last Thursday, the topic of the discussion was “startup funding value chain”. Within that context the following topics were discussed:
- Raising funds
- Angel investors
- Mentors
- Term sheet
The following are highlights of the comments made during the discussion:
Raising funds
It was argued some entrepreneurs focus entirely on raising funds and getting an investor rather than first try to grow their business. The advice given by some of the participants were that do not raise funds for as long as possible and make your startup cash positive as soon as possible so that you don’t rely on external investors alone.
Angel investors
Some of attendants had experienced that having small number of angel investors who are committed is better than a large number of investors who aren’t committed. Majority of the angel investors in Iran are used to traditional forms of investment and they compare the return on their investment in a tech company to for example bank interests. Angel investors need to have a long term view of their investment (7–10 years not 2–3 years). It is understood that a good angel investor gets involved to help grow the business, if they can’t help you grow they are the wrong fit for your startup.
A few comments were made in regards to investors not having faith in the entrepreneurs to deliver. As we have a very young ecosystem, it was commented that angel investors have not been founders and come with traditional managerial mindsets rather than empowerment.
Mentors
In regards to the ecosystem players it was argued that a big majority don’t have the right knowledge. Entrepreneurs don’t have easy access to the right mentors and the wrong type of mentors can ruin the ecosystem by giving founders the wrong advice. It was stated we need more mentors who themselves have been founders.
It was suggested accelerators can play a part in mentoring startups specially in the early stages. They can provide guidance with the fund raising process and familiarizing the founders with the term sheets; highlighting the impact that those small prints will have few years down the line.
Term sheet
Founders can get a good understanding of an investor from the term sheet that they present. Although no two term sheets may look the same, founders can get a copy of the basic template from the investor. If they have a fundamental problem with the terms and become aware of it early on in the process they can avoid going through lengthy due diligence processes.
Founders themselves also need to invest resources in reviewing the term sheets carefully. They need to speak to experienced lawyers who are working for the interest of the founders. Getting advice from lawyers who lack experience with term sheets can be very costly.
Next event
A big thank you goes out to all the participants who have attended our events in the past two years. We are in the process of changing the format of our breakfast series so stay tuned for our next event.
Our view
We believe the more open the dialogue, the better it will allow innovation and bringing different disciplines including investors together. These series were started to increase the dialogue and opportunities among ecosystem players, to bridge the gap between those who are willing to know more about the Iranian startup environment and the active players. We believe this will increase openness and transparency.
Finally, if you’d like to be added to the breakfast mailing list, please sign up or follow us on LinkedIn.
This is the twenty fourth in a series of posts about Iratel Ventures Events. We’d love to hear from teams with crazy (but commercial) startups. Get in touch or attend our breakfast series. Finally, don’t forget to get your IV Score to prepare for your next VC meeting.
