Since I became the vice president of Microsoft Accelerator, one of the main challenges I have faced is to define and communicate Microsoft's role in the startup ecosystem. The key to this is to analyze our accurate cognition when talking about the entrepreneurial ecosystem. It's easy to concentrate all our energy on entrepreneurs and visionary people. By meeting with technology leaders and founders, we can create sincere products and services beyond credit for start-ups, and make us a key part of the overall development strategy of each start-up.
However, I want to talk about another important part of the startup ecosystem in this article: investors. Only a few technology companies will go public without venture capital or other external investment. Similarly, Microsoft Accelerator tries to cooperate with the most exciting and successful companies, and we also hope to cooperate with the most wise and far-sighted investors. As we all know, getting investment does not guarantee a perfect result. In many ways, raising money is only the first part of the whole journey.
The venture capital model can be expected that only a relatively small proportion of start-ups can successfully quit. But investors are not just betting. At best, whenever someone invests in a company, they are convinced that the company has the conditions for successful exit.
Helping start-ups understand how to cooperate with investors in the best way and how to position themselves in the venture capital ecosystem is just one example of Microsoft Accelerator providing added value for start-ups. In future articles, we will also discuss how Microsoft Accelerator can support investors.
However, now I want to give five suggestions to start-ups when considering the relationship with investors. Of course, these are all based on my own valuable experience in starting a business, looking for investment and being acquired. So, although your company will be at a different stage, I still want to hear whether these suggestions can cause a sensation.
Investors will ask you some difficult questions.
If you are struggling with what problems your solution has solved for customers, you can be sure that any potential investor will feel the same way. Recently, I held a round-table discussion on bringing the next generation of artificial intelligence innovation into the enterprise at Microsoft's Ignite conference. Saam Motamedi of Greylock Partners emphasized some things that start-ups must determine before showing them to potential investors. Of course, he refers to companies that are committed to artificial intelligence solutions, but I think he has found something universal, that is, investors look at challenges in a similar way to startups.
Saam continued: "The second problem is that many companies use AI more as a marketing term, but when you really see what they are doing, there is no real AI that can promote high-quality and differentiated software value."
Therefore, the inspiration for start-ups here is that if you have any uncertainty, your investors may find it. If you want to use eye-catching terms, make sure you have considered whether they will help or hurt what you want to describe.
Good investors should be good partners.
I remember talking to an entrepreneur who is considering a round of convertible bond financing, because then he doesn't have to give up any board seats to investors. This surprised me, because I need investors who are willing to occupy the board seats. This means that they are investing in what I do, which means that they are committed to providing real value and advice.
I don't like the controversial relationship between investors and entrepreneurs. For example, you are in Shark Tank (also known as "Ingenuity Winner", a series of invention reality shows on ABC TV in the United States, which is a platform for inventors to show their inventions and get investment sponsorship from the host). Investors should hope to provide fair conditions for entrepreneurs and vice versa.
Valuation should be a cooperation, not a negotiation.
The greatest thing investors have ever done for me is to treat me fairly. Kevin Compton was a partner of Kleiner Perkins at that time. When we promoted our company to him, he told us, "What you want is an investor who is willing to give you $6,543.8+0,000 to get a 20% stake in the company, because this is the right deal, and I am willing to do so." He joined us as our first investor and gave us credibility before we accumulated it.
I believe that Microsoft Accelerator, whether providing joint sales opportunities or enhancing the awareness of corporate customers, is providing our alumni enterprises with help far beyond the free use of Microsoft Cloud. I think Microsoft Accelerator will be an entrepreneur partner, just like Kevin is to us.
No investor is better than the wrong investor.
This may belong to advice when most needed is least heeded. When you start a company with your own resources, it finally comes to a critical moment when you need to invest to help you continue to operate. However, investors are just like other partners you bring into the enterprise. The wrong investor may do more harm than good. I think the wrong investor may destroy a company, which is as serious as having no money.
Investors invest in people.
This may be a cliche, but I found it true. I think early investment is three things. The first is the team, that is, people, which is almost more important than anything else. The second is opportunity, and the third is vision. Note that there is nothing mentioned in it. It's a product. Especially in the early stage, the product is not so important, because it may undergo great changes. But investors will tell you that the right team is more important than anything else. You will face many choices and encounter many adversities, and the team is the key to help you tide over the difficulties.