Company founders on crowdinvesting: Every investor can provide know-how as well as money
05/01/2022
Crowdfunding is about more than capital – it also has the advantage that investors are people with specific knowledge who can offer the companies in which they invest more than just financial help. Company founders and investors summed up their experiences at the Crowdberry Forum during the panel discussion “Capital is more than just money”, which included executives from waste management company Sensoneo, boat rental and yacht charter booking platform Boataround, and Creative Pro, one of the largest digital and event agencies in Europe.
Creative Pro received an injection of growth capital via Crowdberry, which executives said played a vital important role in the company’s evolution. “We never called ourselves a startup, but we worked with our own equity for many years. We had to come up with other solutions if we wanted to grow, and it was Crowdberry that helped us expand and raise new funds,” said Štefan Kozák, the company’s founder.
Kozák sees such private investors as some of the key people behind the company’s success. They don’t do this anonymously but invest their money with certain intentions, which, according to him, provides the added value. This is also what helped Creative Pro manage to survive the difficult period during the Covid-19 pandemic.
Good chemistry is the basis
Growth capital also helped Slovak company Sensoneo, a leader in waste management. Using the funding, in a short period of time the company managed to expand from just two countries to more than 64.
“Our team has grown from five to 50 people, and sales are doubling year on year. In addition to money, each investor provided us with more know-how, from product pricing to software setup. These are the areas where they helped us and developed our business,” said Martin Basila, who founded the company with his wife.
Basila sees the greatest added value of private investment demonstrated in the fact that his friends and acquaintances have also invested through the Crowdberry platform; this indicates that behind these investments are specific people with similar interests. The chemistry between the investor and the company also plays a role here, which Basila regards as a crucial factor.
“Good chemistry is the very basis. In a normal situation, the investors will drill you – this is the process that shows whether it’s an investor who listens and wants to be a partner, or one who simply wants to modify the company to fit their own image,” he said.
Investor David Holý also emphasized good relations as well as the chemistry between investor and company. “If it’s not a good match, it’ll never work,” he said, adding that investors need to sit down with the company and clarify their views on its direction.
Although investors and their money are very attractive, it doesn’t always end well. As Pavel Pribiš from Boataround pointed out, an investor can also hurt a company. “There are a lot of people who may think that an investor is always a company’s salvation, but that’s not always the case. A good investor can be discovered but can also be rejected – that’s what happens when the chemistry doesn’t work out.”
At Boataround, he is glad that no one investor is trying to push through a single opinion, and that relationships are far more important than promoting one particular policy.
During the crisis, Boataround even received several funding offers that it had to emphatically reject. “We were simply against them, even though we were going through serious problems with the crisis,” said Pribiš.
Hard times? Opportunity!
Investing isn’t always fun and games, however. Many view the securing of investment as a success, but that’s not quite true. After the initial enthusiasm from raising the funds wanes, that is when the tough work starts. Especially when Covid-19 comes into play.
Still, many investors see crisis as a new opportunity. As David Holý noted, hard times are simply natural: always have been, always will be. “There are risks associated with investing, and investors must reckon with failure. The biggest problems arise when company founders come into conflict with investors, which can end in litigation. This can happen to any investor,” said Holý, describing one unpleasant scenario in an investor-company relationship.
Sensoneo has gone through a number of crises. “Even to the point that we could hardly pay our wages. This is when investors stepped in to help us,” said Martin Basila.
Investor Marek Neckář agrees that hard times are also opportunities: “It simply came to our notice then. I call it a cleansing of the market. Those who are ready and responsible will survive. Crises have always been there and always will be, but nobody could see Covid coming.”
Local patriotism
What motivation do investors have to invest in companies in Slovakia or the Czech Republic? Many of them claim it’s patriotism that attracts them to investing at home. They want to help domestic companies succeed in the global market place. This is related to the fact that every investor wants to earn more than they would in the bank, albeit with a higher risk.
“Every investor is proud to be part of something that crosses Slovak borders and becomes a global company. The combination of local patriotism and better returns is a very attractive investment opportunity,” said investor Marek Neckár, adding that trust is, of course, a very important factor.
“Giving someone money without the element of trust is not very responsible. Today, investors also invest internationally, but they don’t always know that much about the companies,” he added.
David Holý holds a similar view, claiming he wants to invest capital in the country where he was born. “We have smart people here, and we need to motivate the next generation to establish companies and startups. Still, companies must have believable stories and be backed by good people with a history,” he said.
Ethics and transparency in investment are a crucial area – it’s essential that money from investors is not “toxic”, but is invested based on values and vision. According to the panel participants, this is a bond that has to last many years. “If we’re tearing our hair out from the beginning, it’ll never work,” said Crowdberry moderator and partner Michal Nešpor.