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Just How Evil or Stupid Are Investors In Emerging Markets?

Ok. So this is going to be a really depressing presentation. I’m gonna tell you how much being an investor or being an entrepreneur in emerging markets really sucks it’s just terrible. You should all leave and go home and don’t do any more startups. It’s really a bad idea!

So here’s the thing there’s not that many investors in emerging markets.There are certainly usually more startups and more founders than there are investors. How many are investors who want to raise their hands again? The ones I’m calling evil and stupid. Hasan Aslanoba obviously a very evil and stupid man!

So you know typical terms in a lot of emerging markets like I want half your company for fifty thousand dollars or seventy percent your company for a couple hundred thousand dollars.You know it’s not really that they’re evil. At least most of them it’s just that there’s not much supply for all the demands. There’s not very many investors in a lot of emerging markets in Silicon Valley and in Beijing that’s not really the case there are lots of investors and there’s also been a history of exits in silicon valley that lead those investors to become greedy and they have a fear of missing out but in a lot of emerging markets they’re just clearly more you know demand than there is supply and there’s and  no urgency.

There’s no lack there’s not very much competition and investors can afford to wait they can afford to give you shitty terms, low valuations, not make investments at all and you will still talk to them. In Silicon Valley if investors behave that way we generally ostracized then. We don’t talk to them and we tell other founders about them and then they don’t get any deals and so bad behavior in Silicon Valley or at least that evil and term sheet behavior is not rewarded if you want to be an investor in an ongoing basis in emerging markets unfortunately you  got to suck it up. You have to take what’s available to you as a founder if you don’t like those terms then you know run a cash flow based business. Borrowing money from your mom from other friends and family  but it’s gonna be challenging.I will say as you see exits in markets those conditions tend to change. So big exits like Yemeksepeti  certainly are optimistic for the future for things to change.

One thing I will ask investors is please stop asking for business plans and revenue projections. There’s a lot of people who think the business plans are the source of a great business. I tend to disagree with that I think that actual functional products and growth strategies are what are useful to build big businesses and creative founders of course but I’d rather see expense projections than revenue projections. At least you might not be lying to me about spending money and I really wanna see more marketing plans not so much business plans and by marketing plans what I really mean is test cases on how to acquire customers and some proof about how those marketing plans work not just the plans themselves but the actual campaigns. Maybe some online search campaigns, maybe some other things that have brought in customers again. Wins and exits are what is going to create fear of missing out and that’s what’s gonna create more investors and hopefully as more competition occurs those terms get less crappy.

https://www.youtube.com/watch?v=96LLZ_B0eHw]]>

─ January 2, 2016