Paying it forward – successful founders help and support the next generation of startups.
This support comes in many forms; mentoring, advise, introductions and investment. It’s also not specific to the tech world, there has also been a tradition of one generation helping the next.
We can see that it’s well established in NI through the different programs, mentors, advisors and meetups.
Like everywhere NI has great stories of success and failure. Like everywhere qualifying success and failure isn’t easy but is done in coffee shops and bars on a daily basis.
Instinctively this is done in cash terms, the number quoted in an exit- successful trade sale or bankruptcy is the yard stick. But then, it’s qualified – an NI Exit, a London Exit or a Californian Exit?
Then the question is asked – what is better? to have a modest trade sale and make enough to pay off your mortgage or to have flown so close to the sun that you complete a Silicon Valley sized funding round and have it all crash down to earth, leaving you with nothing. Both of these people will have to work again, so which is a more valuable experience?
The answer is both, while one will arguably be happier, they will both have learned a lot through the process. Perhaps the modest exit was a realisation that the market and company were changing so it was time to get out. Perhaps the big failure was a legislative change that undermined the startup’s proposition giving it no future. The entrepreneurs will have come out with knowledge, skills and scars which will be invaluable to the next generation.
Those with bigger exits will likely be keen to invest to replicate success. In all startup ecosystems, when word gets out that someone is investing, they get inundated with pitch decks and calls for coffee.
If these investors give their time is so valuable. If you’re making that approach it’s crucial to craft it to meet their interests and expertise. If possible try and find someone to make an introduction. Make sure you can articulate your business idea, have a data room firmly in place and have a clear ask. That ask can be financial but as mentioned above it can be advise and supprt.
There are also people who chose to move in their own circle’s and still support, encourage, guide and invest. “Yer Man or Woman up the road” are arguably Northern Ireland’s greatest resource and should be encouraged and cherished.
Their quiet approach, depth of knowledge, experience and networks are often invaluable. Founders of startups will often develop relationships with people like this, and they can be invaluable. Relationships will often change when money gets involved so it’s important to approach investment or lending on commercial terms and involve an accountant or financial adviser. Having SEIS advanced approval from HMRC is crucial for a startup at this stage. The 50% tax relief on an investment is a recognised way to provide some comfort to de-risk the investment.
This will be a long term relationship so it has to be built on strong foundations. It’s often compared to marriage that aims to end with a divorce on glorious terms. Therefore make sure you as the founder and the investor are on the same page with the same outcome in mind. Learn from their failures and use knowledge to make your startup better with potential bigger exit.
Pay it forward – as a founder look for those with real life experience to help you along
Pay it forward – As a mentor or investor reach out to our Raise community to find good founders to help.