On May 5th, 2016, the Genesis Centre was lucky enough to have an amazing speaker in Permjot Valia come to the Centre, and have a relaxed, fun, and interesting discussion on the current climate of the Atlantic Province start-up community, difficulties faced by start-ups of all kinds, and overall philosophies on life, business, and mixing the two. Permjot, originally from London, UK, is an accomplished fund manager, mentor, and start-up investor, who currently splits his time between London and Nova Scotia, where he hosts the world-renowned MentorCamp, which connects promising start-ups with experienced mentors who can provide the insight needed to ensure start-up success.
With representatives from all our client companies, and some snacks, in the room, this made for an incredibly beneficial sit-down for our clients. From Permjot’s tales of Arkansas, to the origins of words, such as angel investor and turkey (which Permjot, sadly, did not get to tell us), the chat stretched across many topics and themes. Here are three major takeaways for our clients based on this informal chat with the one and only Permjot Valia.
1. The Two Types of Risk: Technology vs. Market
As a new company, the risk a start-up faces can be boiled down into two basic sections, technology risk and market risk. Technology risk arises when the technology needed for the success of the start-up has not been developed or has not yet been fully developed, and the start-up may require R&D. Market risk arises where the potential market is not fully known, or is not large enough to sustain the newly developed start-up.
While many start-ups face a combination of these risks, Permjot illustrated that a start-up with only technology risk is much more appealing to investors than one with only market risk. With the speed at which technology advances, a solution for a start-up's technology risk could be found in a short period of R&D time, and assuming it had minimal market risk, it could begin selling fairly quickly to a large market. Market risk on the other hand, is more difficult to minimize easily and quickly, as markets are less fluid, and if the market does not want your technology, it simply will not purchase it.
2. Be Likable
Now, let’s say your start-up has market risk. Does that mean no investor will ever be interested in you? Of course not! One of the most important pieces of advice Permjot gave to our client companies was the simple necessity of being a decent, motivated person. The first thing many investors look at, before they look at a business plan, or market risk, or technology risk, is whether they like the founder as a person.
A founder can be well-liked by investors by being passionate about their start-up, humble in their mannerisms, and determined when the time comes. Being likable will not only help start-up founders become better entrepreneurs, it can help anyone become a better person. The relationship between investor and founder is heavily based on trust and belief in one another, and honest, true likability (ie. not deceiving anyone) is simply the best way to build trust in a relationship.
3. The Bottom Line: Repeatable Business
Of course, likability isn’t the only thing. It’s a major piece, and an investor-founder relationship will go nowhere without trust, but on top of that, a founder must demonstrate that they have a repeatable, scalable business model. Mr. Valia suggested that this well-designed business model is far more important that a simple business plan, and that business plans are not what investors necessarily look for in a company.
If the cost to invest in or acquire a start-up is higher than the foreseeable, potential profits of the start-up, than the investment simply does not make sense. So the bottom line in an investor’s decision to invest in a start-up is whether or not they’ll be able to recoup their costs.
Our fireside chat with Permjot Valia was an informative, interesting, and all-around fun evening. Much more was discussed than can be written in a simple blog post, and the lessons learned by our clients will certainly assist them on their journeys into the marketplace, long after they’ve graduated from the Genesis Centre. We at the Centre would like to thank Mr. Valia, and let him know he can stop by whenever he’s in town. Maybe then we can finally learn the origin of the word “turkey”.