For our Weekly Talk last Wednesday, February 27th, Guilherme Cohn, mentor at 21212 and partner at Confrapar, spoke to us about investments and running your start-up. Below is a quick recap of some of the interesting points he discussed with us.
· Premature scaling is a reality. After closing a round of funding, it is easy to spend money hiring a large team hoping that it will help the growth of your business. However, there is still a high risk that months will go by and your business will have no growth at all. If this occurs, you will be using up your money before you have time to see what you are doing wrong and make adjustments. Investors want to see that you know how to allocate their money strategically so premature scaling doesn’t occur.
· A business plan will provide comfort for the investor but can be dangerous for the entrepreneur. It is important that entrepreneurs don’t become too comfortable with it. New ideas and strategies should always be tested to get feedback and redefine the business based on the results. If an entrepreneur relies too much on a business plan it may hold him back from going out there and constantly searching for the customer feedback he really needs.
· Enthusiasm is good, but commitment is even better. It is easy to show enthusiasm about your business but commitment is what investors really want to see. It assures them that even if money is running out or revenues are low, you have what it takes to run a business and you won’t quit. It is important for the investor to see that you really believe in what you are doing no matter what the circumstances.
· Don’t blame your angel investor for problems within your start-up. The angel investor’s job is to provide capital for your business and he shouldn’t be expected to do more than that. He may help with mentoring or offer his experience and network, but this should be recognized as going above and beyond his role.
· Hiring a sales team for a start-up is a mistake. No one understands how to sell the business better than the entrepreneurs themselves. A sales team will not know how to explain the product with the same enthusiasm and clarity as those who invented it. They will be less effective at selling your product and, in addition to this, will put distance between the rest of your company and the most important person — the customer.
· It is incorrect to assume that all start-ups are made up of young entrepreneurs. Many businesses push away intelligent people just because they are older. Age shouldn’t matter and more experience in the field is always a plus.
· The founders should always be the ones to make the final decisions. No one understands the business as well as the founders, so they should always be the ones to have the final say in the next step.
Take a look at this quick video where Guilherme shares some more important tips and thoughts!
Huge thanks to Guilherme for coming into our studio. We hope to see you again soon!