A startup’s growth stages

24.11.2018   |  Featured  |  Startup

No matter how incipient it might be, any business called startup goes through a series of stages until it reaches maturity. Once I have defined it as a venture initiative looking for a business model, the most natural classification of the stages has to do with the type of financing.

1. Founder’s Resources/Seed Money

It is obvious that the first stage of a startup has to do with an investment of money, work and competence by the founder or founders. However, this stage should not be either anarchical or excessively intuitive. Pasion has its role, but a business plan for each stage is indispensable. It all starts from objectives, which may be related to, for instance, prototyping a product or software and, according to that, the effort is clarified. Firstly, a business plan shows you that for a startup you would need more than money. The assessment of the figures in respect of the work done, in working hours or something similar, clarifies things. As of the time when they cease to be dreams, startups may no longer a leisure activity. Successful entrepreneurs say that it also affects your personal life.

2. Support by the Family and Friends

To us, Romanians, it seems strange to have to ask for money or other types of involvement from family and friends. To me, however, it seems recommendable. It is a serious test for the idea of startup. Firstly, a positive reaction by the people close to us may be a good indicator for a future success. Secondly, it is a test of seriousness for the entrepreneur: involvement by the family obligates you to be something else than a mere fund hunter, that is to be serious and engaged.

3. Angel Investor

You may all have heard of this, but I am humbly taking the liberty of telling more here, as I have a track record of three successful exists, one of them being for Vector Watch. It is in this stage that the startup is not profitable yet, but already has the general features of a proper business. In order for such prototype to turn into a valid product that monetizes, it needs a financing surplus. As different from banks or other financing options, angel investors provide such surplus without too many formal guarantees or interests, in exchange for a share of the future business. A competent angel investor is not only a source of money, but also of advice, as the scope of their business background is usually more complex than the one of the startup’s founder. As they are willing to risk their own funds, they would want to closely monitor the evolution of the startup and, if they are a true angel investors, they would know how to do that without undermining the founder’s prerogatives.

In this respect, some entrepreneurs simply look for mentors able to offer them know-how and connections without any financial contribution. On the other end, the so called venture capitalists differ from angel investors by that they do not provide financing from own equity, but from the equity of others. This makes them more similar, comparatively speaking, to banks, even if there are substantial differences.

4. Venture Capital(ist)

They say about venture capital that “it comes before anything happens”. The Romanian equivalent of this term, “capital de risc”, describes pretty clear what it is about. The business entities that ensure this type of capital are after a high return on investment, involving a matching risk. The investment comes with a pack of a governing proposal jointly agreed with the entrepreneurs, which has the role of generating the profit expected by the investor, when they exit one way or another.

5. Exit and Listing on the Stock Exchange

From all the above, it is obvious that, generally, success does not come easy. Experts say that startups become mature businesses in five to ten years. What happens with the business that has begun to nevertheless generate profit at a steady pace? In the globalized world in which we are living, if the business is not a family kiosk, it will evolve towards exit, mergers or joint ventures.

In principle, there are two main types of exit: towards investment funds, which intend to obtain a safe profit without being necessarily specialized in startups, or towards bigger companies on similar markets, companies which are on a look-out for innovation and assets. This is as far as the recipient is concerned, because in respect of entrepreneurs there are two types that can benefit: the founders of the business and the investors of the initial phases, which have acquired a minority, but strategic position.

At the other end of the cycle, there is an exit towards an investment fund or the listing on stock exchange (an objective that is even more remote). These are more complex operations, which, generally, come after other types of contributions in capital and, in the long run, they are all the more necessary.

Octavian Pătrașcu  |   24.11.2018   |  Featured  |  Startup

Three things to test and maintain in HR: hard skills, soft skills, and motivation

25.04.2019   |  News  |  Startup
The quality and efficiency of an employee mainly depend on their professional qualifications, but the modern human resources theory refers to this only through a partial term, namely "hard skills". In terms of evaluations and professional management, these “hard skills” are supplemented by a range of different qualities defined as "soft skills", such as the motivation that an individual demonstrates or chooses to develop.

Hard Skills: Easy to identify, necessary, but not enough

The term "hard skills" applies especially to fundamental professional knowledge, skills, and abilities, but not only. For example, if a programmer has to write code in Java, he will obviously have to know the programming language. In the field of hard skills, however, complementary skills such as foreign languages ​​or driving licenses also come into play. If the job description is not IT-related, the computer skills - quasi-generalized today - are also in the same complementary category. Upon hiring, hard skills can be easily tested or proven. Basically, all the skills in this category can be certified through a diploma or a certificate of qualification. These skills are the basis for the future work of the employee, but in the vast majority of cases, they are not enough to ensure good performance at the workplace.

Soft Skills: harder to test, especially required for higher positions

These are somewhat social qualities, relating especially to people-interacting abilities. Soft skills include teamwork skills, communication skills, leadership qualities, and the ability to solve problems as they come. From simple politeness to a nonconflictual attitude, a whole range of attributes can be added here, including good time management or the desire to conform to strict professional ethics. If hard skills are easy to identify, in the case of soft skills, the stereotype enumerations present in CVs are never enough proof of their existence. They can somehow be felt when hiring, during their interview or, possibly, through psychological tests set up by human resources specialists. As they mostly focus on human interaction, soft skills are increasingly needed as the position of the employee in the hierarchy is higher, but the situation differs from one job description to another. If the programmer we had as an example earlier does not necessarily need soft skills when writing code, a sales or marketing specialist will interact with the top management and thus cannot work without them.

Motivation: differs from case to case

Motivation is a problem that concerned psychologists way before Maslow's Human Pyramid of Needs. There are many hypotheses and models that relate to this theory. I will just state that a first classification refers to financial and extra-financial motivations. The former refers to material compensation and are accepted unanimously. However, since the beginning of the 20th century, it has become clear that there is no direct link between payment and the efficiency of a person. 100 years ago, however, besides the famous $5-a-day salary, Henry Ford offered land lots, kindergartens for their children and, in the case of immigrants, English courses to help them integrate into the mass production processes. Today, large companies provide health insurance, relaxation areas, various educational classes, physical activity facilities. All of these include career plans and contract terms that offer job security and much more. Perhaps, the first thing to remember is that motivation differs greatly from one employee to another. Effective management should be as flexible as possible, in accordance with the needs and incentives of employees, beyond the standard packages.

The Employer’s Perspective

From what we described above it seems that that the employer will consider the three components as we’ve structured them. Hard skills are easy to identify and absolutely necessary to ensure performance in a particular position, so these are the first ones that will be tested. Soft skills can be identified to a certain extent in the midst of the employment process, but initial perceptions can be confirmed or denied later on. What’s more important is sustaining them at the workplace, often as a necessity for promotion on a higher hierarchy level. As final words, motivation has qualitative rather than quantitative aspects. Employers should be less concerned about the answer to the question "how motivated is an employee?", but rather show concern towards the type of motivation that employees are most responsive to. Schematically speaking, if hard skills are mainly the employee's concern, soft skills relate to a process that takes place between the employee and the company, and in the case of motivation, it should meet the needs of the employee. Only by paying attention to all the three components, the employer and the employee can have a mutually satisfactory and productive relationship.
Read full article

How I take the decision to invest in a startup

25.02.2019   |  Startup
An investor receives far more funding requests than the ones he can actually get involved in. Even the proposals that include a good pitch and business plan have to go through a screening procedure in which the potential investor obtains his necessary clarifications. We do have such procedures in our companies and they’re not secret – but, instead, they are highly relevant about any investor’s expectations and steps that entrepreneurs have to follow through. This is the reason I’ve chosen to present our procedure in brief. (more…)
Read full article

Latest Articles
In Tech

24.11.2018   |   Tech

10 technological trends in 2019

The top 10 technological trends of 2019 include, according to consulting company Gartner, exotic notions, such as “digital germs” or the software programmed by the artificial intelligence. The top also includes relatively better known technologies, such as Blockchain or quantum computing.  (more…)
Read full article
24.11.2018   |   Tech

The most interesting tech startups

LinkedIn updated at the beginning of this fall the top of the most interesting startups in 2018. As expected, the top is dominated by tech companies. I’ll analyze in brief of few of them. (more…)
Read full article

Latest Articles
In Capital Market

04.02.2019   |   Capital Ma...

Alternative Investments (I): Art, Gold, Wine

If the investments in shares, bonds or bank deposits seem boring to you, then you should have a look at the so called alternative investment market, which can be very roughly described as being everything that does not fall under the categories above. Maybe, in this case, you will be surprised to see that success is even more problematic here than on the classic markets. (more…)
Read full article
15.12.2018   |   Capital Ma...

Capital market in 2019

JP Morgan published, at the end of October, a forecast regarding the capital market in 2019. If the general macroeconomic picture is positive, there are, however, certain developments that investors should consider. Here are some important tendencies and my opinion on them.  (more…)
Read full article

Latest Articles
In Business Travel

21.01.2019   |   Business T...

Romania seen through foreign investor eyes

I am a Romanian businessman, but I consider myself lucky for being born in a time when business became borderless. In other words, I’ve been interacting with non-Romanian partners for almost 10 years. So, since this text is in English, you are surely interested in a short list of my foreign partners’ perceptions of Romania. Warning: most positive things have a downside.  (more…)
Read full article
26.11.2018   |   Business T...

Japanese Business Dictionary

Last summer, Japan and the European Union signed a historic free trade agreement, regarding food products, cars and long lasting development products, among other things. There is a new ambassador in Bucharest and we do no longer need a visa for the short term trips to Tokyo or Osaka. Most certainly, Japan is a country full of opportunities and I have started by sorting out the famous problem of Japanese business etiquette. Here are a few recommendations I've verified from several sources:  (more…)
Read full article