On August 1st, 2010 Vincent Maher and Nic Haralambous Co-Founded Motribe; a mobile-web start-up that went live on on September 14th 2010. They received a seed round of venture capital from 4DI Capital and below are a few thoughts from Nic’s experiences with Motribe and what they went through to get their company off the ground with a Venture Capital partner.
In Nic’s words –
Some say that business partners are like married couples. I don’t think so. Marriages are very easy to exit out of, divorce is rife. Getting out of a business relationship is exceptionally difficult and should be so for various reasons. I also think that the marriages are entered into after a lot of flailing about and stumbling. The business relationship that I’ve entered in to with Vincent is a very carefully considered, rehearsed and tested one. There are contracts in place, there are plans for the future and there are defined roles. We have worked together for about 3 years in various companies and in various roles. We know that we work well together in high-pressure situations and we know that we can make it work. How do we know this? Because we’ve done it before.
The level of trust and work experience that Vincent and I have makes us a trustworthy and reliable partnership. It’s hard enough to build a business, try building a business while trying to build a partnership. That’s difficult.
The business plan
Our business plan grew and moulded and changed over a period of 4 months. The best thing to happen to our business plan and revenue models was pitching to Venture Capitalists (VC). Through the pitch process and a very humble approach on our side we managed to weed out the bad parts, the unnecessary party and the long and boring parts. In the end we were left with a business plan no longer than 10 pages in total that outlined our business idea, our revenue streams, our first 18 months of expenses and potential and projected revenue.
It’s about the jockey, not the horse
Ideas are everywhere. If you’ve got an idea I can promise you there are many other people with the exact idea or at the very least something very, very similar. Do not hedge your bets on a good idea. Truly great, unique and new ideas are come around once in a generation and no offense but you probably don’t have it (I sure as hell didn’t).
So what you need is a good jockey to build the idea. You need to be an executer, a builder or someone with more than just an idea. You need to know how you are going to make money from your idea, how you are going to grow and you also need to prove that you have the skills, the experience and the potential to get it all done.
Timing, timing, timing
I actually cannot express enough the importance of timing. Sometimes good ideas emerge, launch and fail for one reason: Bad timing. Sometimes an average idea with average people behind it in an average market will make it big because the timing was right. We’ve had a hefty dose of good timing and better luck. We built our business plan over a holiday, the very first VC we met with was the right one, the other VCs who turned us away (and yes there were many of those) did so for the right reasons, we resigned from our jobs, moved to Cape Town, had the right experience, met the right people, tipped in to right market from the right country with the right relationships all the almost perfect time. Everyone says mobile is booming right now and we’re riding that wave. People need what we have right now, not 6 months ago or in 6 months time, right now. It’s about timing.
Once you think you have an idea that might become profitable, you have a business partner (or are going it alone) that can’t help you travel down this path, the next thing you need is domain expertise. Don’t go to a VC coming from a street-sweeping background and tell them that you have this idea to build the next space station close to Venus. You don’t have the domain expertise to do this and they will point that out. If you are pitching a mobile company then you need to prove that you are an expert in the field of mobile and that you have a track record that reflects this.
No one is investing on a hope and prayer, no one is going to give you money because you ask them to politely. You need to be one of the very few people in the industry, country or perhaps even the world who can execute the idea you have.
A Non Disclosure Agreement is NOT a dealbreaker
If the VC, investor, advisor or loan manager wont sign an NDA, who gives a shit? As I’ve said and will say again, you’re idea is not new. The best advice that we received regarding NDAs was this: If you force a VC to sign an NDA you are showing weakness and lack of faith in your idea, you are also showing a lack of trust in the VC and yourself. If you back your idea and yourself, if you have an execution plan and are ready to roll with it then who cares if someone else builds it, you need to know that when you build it, it will be the best, the first and the only.
There are obviously exceptions to this, if you have a unique, once in a lifetime, groundbreaking, revolutionary idea and there is a reason that you believe someone could take your idea, then defend it, but not so violently that you lose sight of reality (If you think you have one of those ideas, contact me).
Don’t be naive enough to think that the first person you go to will look over your business plan, look you in the eye and hand you a cheque for a bazillion dollars. This will not happen, ever. In fact it probably hasn’t ever happened. The process is long, arduous and treacherous. There are risks involved so try and mitigate that risk. Take your business plan to various investors, VC firms, angel investors, wealthy people you know and see what they say, get responses, learn and wait. But please, don’t think that the one VC you got to owes you anything, they don’t and nor does the second or third VC firm. But if you shop around and plug away at it hard enough, one of them will start to take you seriously.
Go with your gut
We did shop around for various offers, as I have stated above. But in the end we went with the firm that we met with at the very beggining. We partnered with the guys who were the most honest, the closest fit to our culture and the most open and transparent.
4Di Capital told us to shop around, they told us to use lawyers of our own to check through contracts, they offered us a deal that we felt was fair and they gave us terms that we understood and we felt comfortable with. In the end, we went with our guts.
I resigned from my job well before we knew that VC was coming our way. It wasn’t about the VC. We were going ahead with our business whether we had a financial backer or not. If you don’t have this level of belief in your business, business partner and skills then don’t bother asking for VC.
Keep at it but listen
People will tell you that you are stupid, that the idea is old, outdated, lame, can’t monetize and wont work. But listen to me when I say this: If you have domain expertise, experience, a track record, the right idea, the right partner, the right timing and a pure unadulterated faith keep at it. However when people tell you that there is a problem or a hole somewhere, mend it, fix it and mould it. There are people out there, many of them, who know better than you or I. Learn, listen and keep at it.
– content syndicated from the blog of Nic Haralambous