Think carefully before taking investors money

When I first pitched to an investor, I thought all my problems will be solved once I got the investment. I was very inexperienced and naive back then.

At the meeting, I managed to impress the investor. Since we were new and had hardly any track record, the investor squeezed our equity share in the company to rock bottom.

My business mentor said this to me: ” David. Don’t take the investor’s money. These guys know that you are good and have potential. Its business. At the negotiation table, they want to make you feel less worthy so that they can take control of the company. In Asia, investors have no patience. In 6 months, if they do not see any money coming in, they will shut you down. Singapore does not celebrate failure. It will be hard to get a second chance later. Why don’t you try to get business on your own without an investor first and start by building a track record before you approach them in the future.”

At that time, I asked myself if that was even possible. I had no workers, no office. How can I even be able to bring in any business? My business mentor continued: “How can you be so sure that if I give you workers and an office, you can bring in the business? Why don’t you just giving a try.”

That is what I did. I turned down the investor offer and gave it a try. It was hard at first. It really challenges your skills in sales, marketing, branding and packaging. I tried making many overseas cold calls. (Don’t forget, at that time, we have no LinkedIn, Facebook, Skype etc) In 6 months, I manage to bring in the first US contract. Though it was a small contract worth only about $10,000, but it was a start. A blessing. We worked from home via FTP. This was our beginning.

Looking back and seeing how others have failed not because they were not good enough, but their fate was ruined by the wrong investors, I am thankful to my business mentor who advise me back then. Finding the right investor is like finding the right life partner. It has to be someone who believes in your vision and is prepared to go through the challenges with you. In my humble opinion, Pixar turning point is Steve Jobs. Having the right investor can make that big difference.

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3 thoughts on “Think carefully before taking investors money

  1. Pingback: How did I first started the studio without external investment? | Entrepreneurship in Animation

  2. This sounds so familiar to me. I’m trying to get the company going without any investors, and I think about the same things you mentioned. It seems so difficult to get clients when you don’t have full time staff. I often think if I had an actual location, a staff of artists it would be easier to get clients. I also have to remind myself that I would HAVE to have clients if I did, because I would need to pay for the staff and additional overhead. I think I have found a nice solution of partnering with creative leadership, and have a robust network of freelance artists I can work with.

    I’m glad things worked out for you going down this same path, and it gives me extra hope. Thank you for sharing your story.

    Like

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