Awesome Ideas · Business Strategy

Get investor or Funding from services?

Rahmat Kurniawan Founder @TotalStudio & Freelance CTO

Last updated on July 9th, 2017

Let’s say i have idea to build new startup on fin tech industry. This startup will take 2 years and 500K USD to reach minimum "acceptable" result because lot of factors.


This startup will be very hard since lot big players on this industry if play on “plain” strategy. I have valid simple strategy to win without compete with big player before company strong enough. I learned this strategy from 9+ years experiences helping a lot company/startups on fin tech/e-commerce and observation on this industry. This strategy is “forgotten area”, almost none of companies really focus on this area. This forgotten area also can make money at same time.


Now the problem is fund, there 2 options available:


1. Get investor

It possible to get investors, but it will take more than 1 year to talk, negotiate and get money from venture capital. Sometimes it will take longer, i don't want waste my time pitching investor at this level, where business still an idea.

Another thing i'm afraid from investor money is they don’t like strategy which look like a “distraction” to core business. Also getting money from investor take long and painful. I got really bad experiences with "dump" investor money before


2. Get money from service company

I ran software services company, profit from this company are enough to fund that idea in long term game. Beside that, this company have all necessary technology to build the products. But this mean i have to run 2 company at same time, this mean will have more distraction and risk something going messy. Messy services company = no money.

I have capability & strong experiences to handle business, marketing and technology. But i can’t do all this thing at same time, because of this i need “partner”, and this the only solution to build company with this option.


Another problem is finding “right” person for this position. Rarely i meet business person who capable to run technology company with deep understanding how technology/innovation company work. Maybe i’m not lucky enough or doesn’t have bigger network yet.


If you at my position, which way you choose?

1. Get investors

2. Keep services company and working harder to get co-founder?


Sam Fulzele Co-founder, Business developer & Management Strategist

July 9th, 2017

Hi Rahmat, this is the great question you have asked since many entrepreneurs face similar situation at some point. First of all I would like to remind you that 9+ year experience in the game is highly advantageous and you should not feel unlucky or anything like that in case of network.


Talking about your options as you explained - the first (investors) is really going to take time and efforts which might not produce expected outcome. We know the drill how hard it is to convince investors on simply an idea. I also assume from your explanation that real problem here is not a money. Is that right? So what's the point to involve investors at this stage?


If i were you, I would pick second option with the right mindset. I know it is not easy to run two companies successfully at the same time, but strong determination will make it possible. The right mindset is all needed. Now think about how many companies do we know (large or small) who are operating in different niche under same brand or run more than 1 project. I believe this is what separates successful companies from mediocre. Successful enterprises work on two businesses - one the business that you are in today and second the business that you will be in future. Unfortunately, entrepreneurs do not actually realize that we have to spend equal efforts on both simultaneously.

I would suggest to take it as a project and assemble the team. It could be your existing employees or partners. Basic things to consider for working on new project require:

  • Planing, organizing and managing resources
  • Budget
  • A set time
  • CPA - critical path analysis

Hope this helps.


Good Luck & Salam!

Sam


Mahesh J Been working with startups for more than 4 years, building goldenhour.co

July 9th, 2017

I'd go with option 2, mainly because you can fund it yourself. It'll definitely be harder, but it'll help you run it your way and also bring in bigger investment when needed (investors definitely like a setup with lower number of stakeholders)


Consider hiring folks to manage areas of your services company that you don't necessarily need to be present for. I agree having a good sense of business is required to run an efficient tech organization, but if you are not able to find someone like that, then the least you can do is offload one of your skills (I'd say technology) to someone else. He/she doesn't need to be good with business (that's where you'll come in).

Amos Goma Cofounder & CEO @Pecamo International, Development Researcher, Lagos

July 9th, 2017

2. Keep services company and working harder to get co-founder