Funding akin to dating, keep things interesting, advices Roger’s CEO
By Anushia Kandasivam September 26, 2016
- Building a network is key to obtaining appropriate funding
- Commit to your idea instead of diluting energies with a Plan B
CO-FOUNDER and CEO of free group voice messenger Roger, Ricardo Vice Santos, believes that a startup’s quest for funding is not over until you see the money in the bank. Even though an investor may indicate interest in funding your business, or even if all the documents have been signed, they may still delay actually giving you the money.
“What you should do is put pressure on them and, if necessary, create an artificial deadline,” he said, speaking at the Malaysian Global Innovation and Creativity Centre’s (MaGIC) entrepreneurship symposium MA2016, held from Sept 21-24.
Santos gave an example of something he did – telling his investor that if the money was not in the bank account by end of business that day he would not be able to make payroll, the team would quit and the investor would be left with a failed venture. “By 4.30pm the money was in the bank,” he said with a laugh.
Santos and co-founder and CTO Andreas Blixt gave a talk entitled “0 to US$1m in Funding” and spoke about their journey to make a first-of-its-kind voice platform, Roger, into the burgeoning communications must-have tool it is today as well as share their tips and strategies on obtaining funding.
Born out of a need
The idea for Roger came to Santos when he was walking to a subway station in New York one day in 2014. While engrossed with messaging a friend, he walked into a pole. Laughing about it with Blixt later, he wondered why they could not just invent a voice messaging platform to avoid such mishaps.
Santos and Blixt were engineers at Spotify at the time and decided to pursue this idea as a casual and fun side project. A few months and many revisions later, with the blessing of their Spotify boss, they left to pursue the idea full time. Roger was launched in December 2015 and is now used in more than 120 countries.
Santos and Blixt had a vision of what they wanted Roger to be and came up with a few keywords – human, spontaneous, magical.
“But we soon realised that it was none of those things. We needed to build a solid tech base, build a team around it and get funding to do all this,” said Santos, pointing out that obtaining funding is certainly not spontaneous though it does allow your business to move forward faster.
“I like speed. That’s what taking money from a venture capitalist does for your business – it injects speed into everything,” said Santos. “The money allows you to do things right now instead of waiting until you do have the money [from your cash flow].”
“Getting funding is like dating. You want to keep things interesting and not reveal all your cards at once,” Santos opined. “It’s always about power in the relationship. You always want the other person – the investor - to raise the question about funding first.”
Santos quoted Dale Carnegie, author of How to Win Friends and Influence People: The best conversationalist is someone who listens. Basically, people love talking about themselves and what they do; your job as an entrepreneur seeking their funding is to walk in with a smile and keep asking questions about them. “When they finally ask you about your business, you are in the power position.”
Though he had a pitch deck prepared, Santos did not even bring it out at the initial meeting; he only sent it to the investor after they had committed to the project.
Santos revealed that this method worked when obtaining funding for Roger from venture capitalist Social Capital, which invested US$1 million in them.
Build a network
Santos and Blixt believe that building a network is the best and easiest way to find investors, and find investors who you can rely on.
“It is all about the trust factor. This is where personal introductions come into play. This way the investor knows that you have strong ethics because somebody they know is vouching for you and you also know that they can be trusted.”
Santos also advised entrepreneurs to ask the VCs they are interested in to introduce them to the other startups in the VCs portfolio. By talking to these other businesses, you can gauge how the investor works and whether they are a right fit for you.
He also urged entrepreneurs to ensure they maintain a good relationship with their investor not just for the sake of the funding but to sustain your and your business’ reputation in the market.
“Investors talk to each other so if something is wrong, everyone will know about it. Entrepreneurs talk to each other too. So if you have a bad relationship with your investor, everyone will know about it, as everyone will know of a good relationship,” he explained.
Plan B is a waste of time
Taking questions from the audience, Santos and Blixt gave a range of advice from dealing with technology limitations to dealing with investors.
On having a backup plan, Santos is of the opinion that it is impossible to predict all the problems that may crop up and so walking into a project with a Plan B is not a good idea.
“Eventually, you will stop committing to things because you have too many open doors. It’s terrible for you and your team. You need to walk into things believing they will succeed. If they don’t, you move on,” he advised.
“Don’t gripe on the failure, focus on the next thing you can do. If you keep that mentality, eventually things will work for you.”