Startup Life/Analysis/ Best of Sifted Summit 2021: Watch the talks here What does a bad investor look like? Is it worth it to work with corporates? And what are the best alternatives to venture capital? By Karam Filfilan 27 January 2022 \Startup Life Which SaaS products are getting cut? By Tim Smith 22 February 2023 Startup Life/Analysis/ Best of Sifted Summit 2021: Watch the talks here What does a bad investor look like? Is it worth it to work with corporates? And what are the best alternatives to venture capital? By Karam Filfilan 27 January 2022 Last December saw the inaugural Sifted Summit, our very first in-person event with inspiring speakers and a carefully curated guest list of 200 founders and startup leaders. Throughout the day we discussed everything from how to work with corporates to where to find the best talent, from bootstrapping a business to the best exit strategy. You can see the whole day’s panels, fireside chats and roundtables on our YouTube playlist here, but if you’re crunched for time, here’s a round-up of some of our favourite sessions from the day. Investors: What really good — and really bad — looks like Finding investment is one of the most stressful processes founders can go through. So when it comes to pitching, choosing and managing investors, what separates the good from the bad? For Rachael Corson, founder of Afrocenchix, which makes natural hair care products for afro hair, the biggest red flag when it comes to investors is a lack of respect. From shouting founders down to patronising comments, she spoke about some of her worst interactions with potential investors. “At the end of every VC call I’ll ask: ‘What is it that your fund or you as an angel investor can bring to Afrocenchix to help move us to the next level?’. One fund said ‘adult supervision’. I’m 31, I have two children and I’ve been running my business for 11 years. I don’t need adult supervision,” she said. Joe Perkins, founder of VC review platform Landscape, agreed that a lack of respect for founders’ businesses and time was one of the biggest complaints against investors — and was the main reason he started Landscape. “Have the decency of letting a founder know where they are in the process. Don’t keep them hanging on, as fundraising is one of the most stressful things a founder can do. The best thing after a yes is a quick no with critical feedback, but so many VCs are bad at that,” he said. If you do get interest from an investor, don’t agree to all their demands simply to secure the investment. The game has changed, with much more money and different skill sets available to founders than a decade ago, warned Mike Turner, partner at law firm Latham & Watkins. “You need to make sure the motivations of the fund are aligned with your own. Board representation is critical,” he said. “If the investor has a good board nominee suggestion who can add value, that’s a good sign. But if it’s just a financially motivated investor with little to add, push hard against them having a board seat. You can give them information rights, but don’t have people on the board who don’t add anything.” “As a startup founder, some days you’ll be on top of the world — but other days you’ll think, why am I doing this, I should get a job. Having investors who recognise this and can be emotionally supportive is amazing” — Rachael Corson, founder, Afrocenchix Watch the full session on choosing the right investor here. Who needs VCs? There are other funding routes When it comes to funding, it can be difficult to know where to start. For many founders, the ultimate aim is the cold, hard cash from VCs or angel investors, allowing for rapid growth — but this isn’t the right route for everyone. Elizabeth Nyeko is CEO of deeptech startup Modularity Grid, which provides AI software for remotely controlling and monitoring renewable energy systems. Since launching in 2017, Modularity Grid relies entirely on grant funding, receiving an initial jump start of €30k from Imperial College and European Institute of Innovation and Technology’s Climate-KIC Accelerator, followed by a £1.5m grant from Innovate UK. Grant funding made sense as they had a very specific technological problem they needed to solve to grow, and the specifics of grant funding meant they could tailor their application to the exact problem they needed to solve. This allowed them to focus on developing their product without the hassle of drumming up VC meetings and diluting the direction of the business. “The key thing to be aware of with grant funding is that it is heavily bureaucratic. You are contractually tied to spending the money on a specific set of targets in a specific timeline, so you need to do a lot of planning, research and road mapping — which ultimately is a good thing for your project,” said Nyeko. Another funding route is bootstrapping your company on your savings and cash flow, which is exactly what Papara founder Ahmed Karsli did. The Turkish challenger bank reached 10m customers earlier this year with revenue of more than $200m — although Karsli said they only went down the bootstrapping route as no one wanted to invest in his fintech back in 2016. “Being bootstrapped sounds great, but it does have downsides. VC investment isn’t just about the money, it’s about getting advice and guidance. Bootstrapping means being creative and focusing on product and profitability, not growth,” he said. Panellist Asher Ismail cofounded Uncapped, which markets itself as Europe’s first revenue-based finance provider. As a serial entrepreneur, he’s been through crowdfunding, venture capital and bootstrapping. Ismail said raising capital is one of the most stressful things a founder can do, and is fraught with pitfalls. Bootstrap and you can be saddled with debt. Go down the VC route and you might lose control and ownership of your business. Ultimately, Uncapped is about offering founders an easier way of accessing money, he said, because “some founders have a great idea and great business, but just can’t access capital”. “The advantage of being a bootstrapped company is that you have to be creative all the time” — Ahmed Karsli, founder, Papara Watch the full session on alternative funding here. Working with corporates — is it worth it? While startups and corporates are increasingly working together, the success of these partnerships is in doubt. According to a recent survey by McKinsey, just 27% of startups are happy in their working relationship with corporate partners. So what warning signs should a founder watch out for, and is a corporate partner ever worth the effort? Serial entrepreneur — and one-time vice president of disruptive innovation at Unilever — Stephen Rapoport isn’t so sure. “In two years at Unilever, I didn’t see a single partnership that created value for the startup and founder. The thing that irked me the most was the sheer ignorance and lack of empathy between corporates and the startups they worked with,” he said. “Corporations move at a different pace and with a different risk profile. The relationship a corporate gets out of a startup is relatively immaterial to the value a startup might get. That imbalance leads to a lot of problems down the line.” Layla White, founder of TechPassport, agreed that the priorities of a corporate differ greatly from that of a startup. The onus is on founders to push back on time-wasting and unnecessary requests. “A large corporate might like your product and ask for a free three-month trial, unaware that this might cost you £60k, including recruitment, onboarding and training. In your early days, you’re more likely to agree to this, but I’m now trying to push back. Corporates aren’t doing it on purpose, but they have a complete lack of awareness of what it’s like to be a founder,” she said. To make a relationship work, White advocates building a rapport with the highest possible person in a corporation. If they give you time and feedback, that’s a sign of potential success. Jonathan Carrier, cofounder of ZipCharge, was more optimistic. He believes partnership success lies in understanding the signals a corporate gives and building shared targets and outcomes. “Startups want to be endups, which is what corporates are. You need to find a way to get a match between the ambition, the mutual gain and the clock speed of the two. How you view success might be wildly different to how they do, so you need to have targets and outcomes that are shared,” he said. “It’s not that big corporates are being malicious — they just have no understanding of what it’s like to be a startup founder” — Stephen Rapoport, entrepreneur Watch the full session on working with corporates here. Like this and want more? Our Sifted Summit couldn’t have taken place without help from our partners Jeeves, Latham & Watkins, Paddle, Twilio, FTI Consulting and The Nest. You can see the whole day’s panels, fireside chats and roundtables on our YouTube playlist, and a list of the rest of the talks here: Scaling teams — and mentoring superstars — in a time of hyper growth Better together: Don’t grow it alone How, when & why: Lessons in exit strategy from the pros VC backed vs. bootstrapped — Lessons in growth from two founders How to make it in the US of A Missed our Sifted Summit? Lucky for you, we’ll be putting on many more events this year across Europe — follow us on Twitter to hear about our next one near you, and take a look at our upcoming online events here. Related Articles Missed the Sifted Summit? Here’s your cheat sheet for our founders event By Sifted Click here to read more The Sifted founder Rich List 2021 By Isabel Woodford Click here to read more Sifted predictions: what’s in store for European tech in 2022 By Sifted reporters Click here to read more Most Read 1 \Healthtech Is Daniel Ek’s new body scanner worth the hype? 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