Thursday, June 4, 2015

The startup investment boom

Lately there have been many positive news about investments coming to Estonian startups. For example $1,2M in VitalFields and $1,8M in Monese. This is very good for the Baltic-Nordic and European and especially for the Estonian startup scene. With the interest rates at 0 and the stock and real estate markets already overvalued the world changing startups are indeed a viable option for investing.

However I would still urge to keep the feet on the ground and get more focus on real business like revenue, paying customers, net profit and dividends. Think about the following questions:

- Why does getting an investment make such big news whereas getting a bankloan does not? After all an investor expects 1000% return (a bank 10-16%/year).
- Why is offering a free socialnetwork service to million users seen as good business whereas giving out free apples on the street to million bypassers seems a very stupid idea? After all apples do grow on the trees also for free.
- If three people have worked on a business idea for 12 months and are offering 10% of equity for 300 000 euros (which seems to be a quite common case for the first investment round) then have they really created something worth 3Meur? That is 83keur per month per person?

No comments:

Post a Comment