Business

When is time ripe to talk to an investor?

March 17, 2014

Read time 2 min

You might not have known this, but Reaktor is one of the most active early stage investors in Finland. Since launching Reaktor POLTE at Slush in November 2012, we have invested in fifteen different startups, some of them yet to be announced. To learn more, check out reaktorpolte.fi.

The past year or so has been positively intense and the pace is still picking up. We have struck a nerve in the startup community. Every day one of the POLTE-companies makes my day with good news.

How did we end up here and how does this investing thing really work, then? There are some persistent myths and rumors concerning the investment process I would like to address. Let’s start off with that question right there in the title: when should a founder reach out to an investor?

A sizable portion of the startups I meet, especially the really interesting ones, come to me introduced by a common friend. Often I find myself explaining this point: The TV-show “Shark Tank” is dead wrong. It’s not like you’re given one shot and that’s it. I would be stupid to think that way.

The whole idea of seed investments is that we start working on the business together. There’s a long road ahead, risk and uncertainty will remain in the picture for a long time. Usually there will be more investment rounds in the future: new investors will take risks, but they will pay a higher price for that small slice of the company. We’ll want to focus on doing the right things to make the company more valuable every day.

Another vital point here is that it’s better to get to know each other early on. I’m constantly in contact with quite a few startups we have not invested in yet. They may not need the cash yet. The founding teams of these startups are working on things they can only accomplish with their own time and elbow grease.

When should you talk to an investor, then? Here’s the short and simple answer:

Time is right, when you’ve convinced yourself that you want to take the leap.

Drop us a line and come have a cup of quality coffee at the Reaktor office. I want to get to know your team and we’d be happy to pitch in with advice and opinions. No strings attached.

Think of us as a co-founder.

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