According to Karang; The event “Challenges of fundraising process” was held at Science and Science University. This event was attended by Meisham Zargarpour, investment strategist and business development consultant; Mohammad Reza Masoumi, investment manager of Golrang Ventures; Taha Razavi, CEO of “Shab” website and Seyed Mohammad Reza Farhi, co-founder of Bimabazar was held. The panel of this event was managed by Maitham Soleimani, the editor of Karang Weekly.
A good team is the reason for investment
At the beginning of the panel, Soleimani raised the issue of investment and asked the participants what is the most important issue to start investing in a startup.
Mohammad Reza Masoumi, investment manager of Golrang Ventures, in response to this question, first mentioned the two concepts of “jockey” and “horse” in business literature. According to him, a jockey is a symbol of the founder in business literature, and one of its characteristics is high agility and flexibility. Masoumi explained the business model of “Jocky” that they usually receive a small amount at the beginning and if they win, they get the entire amount, which is what they have in common with funders.
In his talk about the concept or in other words another metaphor in business literature called “Horse” he said that he looks at different dimensions of a business model.
Gulrang Ventures investment manager continued: “In the world, the concept of a jockey is placed ahead of a horse; Because usually a good founder has the ability to start a good business.
He finally made the point that it’s the top management of a business that matters, because a good startup needs a good team, not necessarily a good founder.
Soleimani further raised the issue that sometimes the idea of a startup is good, but the startup does not have the ability to implement and execute its idea. Can the investor enter at this stage, or seeing the state of the startup at this stage, the attractiveness of the whole work for the investor will be lost?
In response to this question, Masoumi clearly stated that such plans are usually abandoned. He further explained: “At this stage, of course, it is also considered that the strategic business model can be invested with the change of management, which of course is true for startups that have reached a certain level of maturity.”
He also raised the point that for investors, the person of the founder is important first, in other words, his credibility, and in the next step, the business model itself; But in the end, the sum of the business model and the founder gives the investor the incentive to invest.
The investor must be famous
Meisham Soleimani further raised the issue of investment from the point of view of the capital acceptor and asked Razavi, the CEO of Shab site: “To accept a capital, do you pay attention only to the financial aspect or do you consider other components as well?”
Razavi said in response: “Of course, the financial aspect is very important, but the fact is that for a startup the road map is clear and the component that is missing in this is money, at this stage proposals are heard.” In comparison, the investor’s reputation is very important for a business. Also, we try to predict the future that awaits us after the investment. Finally, the combination of reputation and portfolio is very important for us.”
How should an investor behave in a crisis?
“Shab” business as a tourism business was facing damages during the Corona era. Soleimani raised this issue with Razavi, the CEO of this business, and asked him: “At that time, what was the expectation of investors from Shab?”
Razavi replied: “Maintaining human resources is very important for Shab, and for this reason, six months after the outbreak of Corona, this business did not retrench.” But then we started making adjustments with the necessary checks so that we can preserve our resources in the best possible way.”
Corona was one of the critical cases for businesses. But in general, the business is in a crisis stage. Soleimani, raising the issue of crisis, asked about the initial action of investors for such times.
Maisham Zargarpour, capital raising strategist, said: “The answer to this question is complex and the answer depends on the circumstances in which the investment takes place, but two answers can be given;
The first answer is given according to whether the investor’s approach to his investment was purely economic or did he have a strategic view of his investment? In other words, the investor’s view is “VC” or “CVC”. Considering this, the investor will react differently. If the approach is strategic, the reaction of the CVC investor will be greater during the financial injection crisis. Because this position has been recognized as the weak point of the competitors and at this time it can take the market from the competitors.
Or the business has a high strategic aspect and he does not want his business to be destroyed, and as a result, he continues the financial injection.”
In the middle of the discussion, Soleimani raised the issue of the uncertainty of the dimensions and time of the crisis and said: “How much can an issue like Corona, for which we cannot consider a perspective, affect the investment discussion?”
In response, Zargarpour said: “Investment business is the business of buying and selling dreams. In other words, a founder raises the issue that he has advanced part of the work and needs capital to continue the work. The investor also pays attention to a set of things to start investing. These include the vision, motivation and feeling of the founder towards the business, the quality of the team and of course the numbers of the team. The quality of belief in the prospect was very important for investors during the Corona era. In other words, business resilience and its value are important for the continuation of an investor’s work.
In completing his speech, Zargarpour compared the issue of investment to a marriage contract and said: “Ultimately, it is the value of a business that compels the investor to continue investing in critical situations.”
The ephod is not a dream
Verbal understanding is a discussion that can be formed during the stability period of a business between investor and business members. Of course, the written form of understanding and contract, as is known, has a more legal and solid form. By bringing up the issue of oral and written agreements between investors and the business team, Soleimani asked Zargarpour’s opinion on this matter.
Zargarpour first pointed out that basically oral and written agreements should not be different, but practically they will be different because the oral agreement is interpretable, but it will have a more explicit meaning if it is written.
In the continuation of the panel, the discussion of selling dreams of businesses and the border between rationality and illogicality of this dream was discussed. In response to this issue, Farhi said that one should know the difference between a business that knows its idea will not be implemented and a business that believes in its idea, but in the end that idea is not implemented.
Masoumi also pointed out that since we entered B2C businesses, the amount of dream sales has decreased and even investors miss the dream sales of businesses to some extent.
Golrang Investment Group has recently invested in “Efod” service. “Afood” is an online food ordering service, and in other words, it is preparing itself to compete with the big player in this field, Snapfood.
Soleimani asked Masoumi: “Is setting up an online food ordering startup such as “Afood” and claiming to compete with Snapfood, a dream or a reality?
Masoumi said: “It is reality and not just a dream. Of course, it also takes a different path. Sometimes a team takes the lead for investment, and there is also a time when the investment group itself starts to create a team; In case of creating the second position, the investor organization considers benefits and in other words has seen rings. If the dreamer sees the whole chain, good things will definitely happen.”
Following Masoumi’s speech, Soleimani asked him: “What market do you intend to reach by buying a business like Elopik and setting up Afood?”
Masoumi answered: “The point is that we have been active in the fast-moving consumer goods market before. Even now, a large number of orders are being received through Ekala’s ordering system called “Zap”, and it has the second market share after Snap.
In explaining the purchase of Olupik, he also used the argument of the business development strategy and explained that the activity of Olupik and “Zep” will proceed in parallel for the time being, because the needs of the two are different from each other.
The real number of investment is two to three times the announced numbers
In a part of the panel, there was a question and answer session between the attendees and the participants. Meisham Zargarpour, in response to one of the attendees asking whether there is an exact number and figure of successful and failed investments, said: “The Association of Venture Investors Employers annually publishes a report on this issue, and this year’s number was about 50 million dollars. Is. But the point is that these numbers are expressive; In the sense that the collections that were willing announced their investment numbers and were often members of the association.
Regarding the verification of these numbers, he said: “They are verified; But according to my estimate, the real number is between two and three times the announced number; This is because members outside the association, plus some other investments, do not disclose their numbers. Of course, investment failures are not counted in these numbers, but ecosystem members know about these failures.
Masoumi, investment manager of Golrang Ventures, continued Zargarpour’s speech, saying: “The number is around 50 million dollars, but if it is more, it will seem like a joke. For example, Turkey, in which we do not count the “Trendyol” report, has announced its investment figure of two billion dollars.
He further explained: “The reality is that we don’t really have investments in our country, even the risky investments that are made in Turkey are mainly made by foreign VCs. In the past few years, we have seen that VCs in Iran lacked teams, and the existing teams, on the other hand, do not have capital.”
In response to the question, to what extent the entry of investment groups can change the generation of venture capital and finally get investment out of the deadlock, Masoumi said: “I have to explain about the deadlock of investment that in the world the volume of venture capital has dropped by 30-40%. had. What VCs are doing in the world now is survival. This is despite the fact that Iranian startups have been in the survival stage for about six years. “Exiting Elopik is a way to continue to survive.”
He continued: “According to the inflation in the country, foreign VC investment will not be possible. The state of non-investment for foreign businesses has been happening for about a year; “While Iranian businesses have been dealing with this issue for about five years because of inflation and lack of connection with foreign investors.”
Golrang Ventures’ investment manager said: “The discussion of industrial group investments is that they do a lot of calculations before entering the investment, and the reason is that they have a traditional business that has a reliable profit for them. In general, the entry of industrial groups is positive for investment. Of course, putting together a startup and an industrial group that has a traditional nature will definitely be difficult, and in this part the main challenge will arise.”
In another part of the questions and answers, one of the attendees asked: “Regarding startups that are in the basic stage, investment is not made as before and industrial groups and other investors choose startups that have reached maturity and therefore witness creativity among We are not businesses either. What is the reason for choosing mature startups by investors?”
In response to this question, Masoumi, investment manager of Golrang Ventures, said: “The reality is that the level of risk increases in startups at the basic level, and this reduces the motivation for investment.”
In response to the question of whether Golrang Ventures is willing to undertake an investment system like Sarawa’s, he said: “Yes. “Now some of the teams we see are at their most basic level.”
Masoumi also said in response to whether the investment has been made on these teams or not: “Now we are moving the two teams towards finalization, which were in their most superficial state at the beginning of the cooperation.”
Explaining the important parameters for investment, he explained: “Regarding the teams that are in the initial stages, we consider two issues; One is that the team in question can complete our value chain and the other is that they are focused on a relatively new area. Considering these two parameters, we also cooperate with entry-level teams. Their field of work is mostly in the fields of logistics, artificial intelligence and industrial raw materials.
Sarava did not fail; But it stopped
Sarava Venture Investment Company is one of the first investment companies that invests in large collections such as Digikala. The events surrounding this investment company in the last few months have caused some instabilities in this company. For example, what happened to Azadi Innovation Factory; Azadi Innovation Factory was one of Sarava’s investments in the startup ecosystem, which is now ending with the request of the owner.
It goes without saying that Sarava is one of the main developers and even founders of Iran’s startup ecosystem in the 90s. Many believe that the golden age of the startup ecosystem would not have been formed in that decade if it were not for the high-profile investments.
Maitham Soleimani asked the panel participants: “Regarding the recent events in Sarawak, has this company’s experience failed or succeeded?”
Maysam Zargarpour said: “The reality is that we cannot talk about the failure or success of the Sarava experience. Because this is not a race with a finish line, but more like a relay race. Sarava started its activity with the early years of Rouhani’s presidency and the JCPOA and finally an atmosphere of hope; As a result, the decision about the success or failure of the Sarava experience is not correct.
He further explained: “Also, we cannot judge the process that led to a decision because we do not know the influencing factors.” But the results and consequences of a decision can be examined. Considering the more than 10 years of activity of Sarava, the overall activity of this company can be evaluated positively. It is worth mentioning that if it was not for the courage of Sarawa when it started its activities, we would not be in the current situation and we would not even be able to talk about the distance of our investment with other countries. Personally, despite criticizing Sarava’s methods, overall, I evaluate the activity of this company as positive and progressive.”
Following the previous question, Soleimani asked Razavi, CEO of “Shab” business: “Given the current situation, can businesses start working with your business model?”
In response, Razavi said: “Regarding responding to old needs with innovative methods and quickly preparing the team to face the market, there were methods in the world that were introduced to Iran with a little delay by Sarava and had positive effects on the lives of all Iranians that cannot be denied Regarding the fact that people can enter the market with the “night” business model and the entire business model of the “night” business model, I must say that it is 100% possible. Because our movement is based on innovation, and innovation is not limited, and it is enough to focus only on the customer.”
Soleimani asked Farahi, the co-founder of Bimabazar: “Can we witness a sweet decade for startups again, like in the 90s?”
Farhi replied: “The experience of the 90s was really sweet. I have not cooperated with Sarava in any capacity so far, but Sarava deserves a lot of appreciation. One of the reasons is that foreign investment is possible when a country is in complete stability. When it is less stable, it receives foreign capital in the field of construction, and in the most unstable form, it can receive capital in the field of energy; Therefore, the 200 million dollars that Sarava brought into the country in the field of venture capital is equivalent to 20 to 30 billion dollars in the field of energy, so Sarava deserves a lot of encouragement.”
He further explained: “It cannot be said that Sarawa failed, because no one could have predicted today’s situation. As a result, I don’t see Sarava’s activity as failed, but stopped.”
Industrial groups cannot take the place of big investors
In response to the question whether investors like Golrang can create hope for the ecosystem, Masoumi said: “The answer is no. The reality is that our economics are different, and given the way industry groups work, they probably have a higher failure rate because they unconsciously compare their investments to their core business. In general, according to our current economic situation, probably the industrial group will not be able to open many knots of work. In addition, now we are in a situation of inflationary stagnation and it is necessary to reduce this stagnation. On the other hand, we are facing a high rate of emigration. In the end, it will not be possible to return to the sweet years of the 90s.”
In the end, Soleimani asked the panel participants: “Do you foresee inflation conditions in the future in such a way that a more favorable situation is provided for businesses?”
In response to this question, Masoumi, investment manager of Golrang Ventures, said: “We have arranged our work plans based on inflation above 40% in the next five years and we will proceed with the current reservations.”