How to seduce investors

At the first eCommerce Congress held in Madrid on June 8 and 9, we had the opportunity to moderate an investor roundtable in which Luis Martín Cabiedes from Cabiedes & Partners, Patrick Raibaut from Debaeque and Sergio Perez from Caixa Capital Risc participated, and which dealt with how to seduce investors.Although there was a lot of unanimity among the three investors when it came to describing what seduces them about an entrepreneur and his project, there are nuances that are interesting and that are interesting to rescue. The first topic we discussed was that of training... the question was aimed at understanding if an entrepreneur trained at Harvard, IESE or IE seduces more than one who has not finished university and has jumped into the ring. In light of the statistics that say that more than 50% of self-made millionaires have not completed college, this topic merited a good discussion. Luis Martín Cabiedes opened the debate and was the most emphatic of the three, stressing that times are not what they were and that he prefers a well-trained entrepreneur who has completed the university properly and the more prestigious the university, the better. Patrick and Sergio were less blunt and their answers were more tangential. Patrick introduced a key theme: he values people who are flexible, able to change at the necessary speed and to surround themselves with the best people. Sergio pointed out that he prioritizes people who know how to face problems and are able to solve them, who know how to work as a team and who have an open mind. These answers led us to ask them about the value they give to entrepreneurs compared to projects... is there a balance? Does the entrepreneur dominate the project? or vice versa? For Luis Martín, the project is more important than the entrepreneur. In fact, he is always looking for projects that can be carried out by what he calls an “average entrepreneur”. For Patrick and Sergio, on the other hand, the entrepreneur — and the team as a whole — is more important than the project, especially in its earliest stages. Regarding the Business Plan, Sergio Pérez was critical of them, since in 99% of cases, cost projections are met, while sales projections... are rarely or never right. For this reason, for him, the important thing is that entrepreneurs know very well the market in which they are going to compete. Patrick Raibaut argued that for him the Business Plan is relatively useful and, on the other hand, he finds it essential that the entrepreneur, no matter how best business plan he has carried out, has a good capacity to redirect operations as quickly as it becomes clear that the hypotheses are not met. For Luis Martín, it is important that entrepreneurs have developed a good business plan, written in Word and of about 40 pages, but even more so, that they are able to transmit the key concepts of the plan on a single sheet of paper that describes the business model very clearly... that is, what they sell, to whom and what are the “revenue streams”. About how they prefer to have a project come to their attention, Luis explained that for him the important thing is that they arrive when at least two requirements are met: when the project team is complete and when they have already written all 40 pages of the Business Plan (although he then asks them to send him only the executive summary). In the same way, Sergio sees better those entrepreneurs who arrive with their homework done well, who have looked at the investor's website and are clear about how they invest, in which industries and what they can expect from them. Patrick suggests that entrepreneurs look for a way for the project to reach them through a contact or eventually a forum and always through a good executive summary. Finally, and although we move away from the main topic of the debate, we explore a topic that is no small, which is the mistakes made by investment funds, to which everyone responded candidly and based on the concrete experiences they have accumulated over the years they have been operating. Sergio mentioned three issues: the first to avoid investing in “mono-entrepreneurs”, the second not to be carried away by the excessively optimistic expectations of entrepreneurs, and the third not to overestimate the real capacity of projects to expand internationally. Patrick emphasized the importance of avoiding investing in mono-entrepreneurs and introduced the theme that in projects there must be a “visionary” who, above all, must be flexible and with enormous capacity to adapt to changes in the environment. In addition, he stressed that funds must know how to accept their mistakes, assume losses and avoid continuing to invest in projects that are not going well. Luis Martín Cabiedes, finally, commented that beyond the errors, which in his case occur statistically in 70% of the investments he makes, the important thing is to know how to live with them.