This is the one question a top SA venture capitalist asks startups before she invests
- A CEO who directs over $1 billion in investment says the reason why an entrepreneur starts a company should be the biggest consideration before anyone invests in it.
- Most people seemed swayed by the "cool factor" of being an entrepreneur, but fail to put in the work, says Janine Basel.
The reason why an entrepreneur starts a company should be the biggest consideration before anyone invests in it, says Janine Basel, CEO of Akro Capital.
Basel directly manages roughly R100 million in startup funding, and helps direct over $1 billion in foreign startup investment in South Africa.
“Before we ask details about their strategy, their startup plan etc, we try to find out more about the mission of the person, and whether there is a true mission at all,” Basel told Business Insider South Africa.
“It's crucial to have dedicated, committed individuals, and possibly the quality most lacking in startups we have seen, is a real hunger for success, a real hunger to make the dream into a reality.
“A lot of people simply seem swayed by the ‘cool factor' of being an entrepreneur, and of course no one has any idea of the dedication and commitment and discipline required for the task ahead.”
Basel says Akro Capital and its partners typically invest between R100,000 and R250,000 in a startup, almost exclusively in tech-focussed startups.
“There is loads of money available, and people don't realise this, but the honest answer is that it’s not about the money but finding the right startup to take it,” she says.
“Ideas, of course, need to be good and must hold potential for a high return, but the real differentiation is how passionate, committed and dedicated the startup is to their dream – and this is usually seen in results, not talk.”
The only reason why Akro invests in tech is because investors expect “truly big returns”, Basel says.
“Remember that the average investor is exposed to a one-in-20 success rate with investing in startups, so he/she is putting a lot on the line and needs to be excited about possible returns.”
“Companies with massive capital requirements or scaling infrastructure tend to grow too slowly for big returns to be feasible in reasonable time frames.”
Basel says she is driven to help South African startups because she understands the importance assistance make to a fledgeling startup.
“I know it sounds cheesy but it gives me an outlet for helping others,” she says.
“And I get so inspired by young startups that feel they will be the next Elon Musk or Tesla. Who are not afraid to do things their way, who have an inner confidence to pursue their own dream - in their own way.”
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