To the question of how venture investors recognize the winners of the future, Lev Dolgatsjov answers that they don’t really know. “Purely by gut feeling.” However, when speaking in front of the gazelles, the business angel pointed out some aspects to focus on, if there is a desire to jump to the heights as a unicorn at some point.
Lev Dolgatchev first drew attention to the founders of the company. Investors’ eyes are made by experts in their field, who also complement each other in terms of character (introvert and extrovert, good and bad policeman). In addition, the basic personal characteristics of an entrepreneurial person are important, such as the desire to learn, ambition, optimism, politeness. Investors also like exotic visionaries like Steve Jobs and Elon Musk.
However, according to Dolgatsjov, the theory that strong founders are the formula for victory is not true at all. From his own experience, the investor says that it is quite possible that the founders are not in competent positions. They lose intrinsic motivation, quit or even die. There are also frequent conflicts within the team, they become passive, aggressive in what they do and may even start stealing from behind the company.
At the same time, Dolgachev emphasized that even if the business idea is absurd, but the people behind it are bright-eyed, it is worth investing in the business. He cited the design program Canva as an example. “I absolutely didn’t think it would become anything,” Dolgatsjov said, adding that Canva is now worth $26 billion. However, the world of start-ups also has its downside, where you may come across charismatic types who build castles in the air.
According to Dolgatsjov, if the founder is bored, this business will not become a unicorn. Numbers may be beautiful, but lack of confidence and brilliance does not bring success. “All the winners I know are lively,” says Dolgatsjov.
According to the business angel, things are bad if the company is profitable – big investors and venture capitalists are not inclined to invest their money in the company in this case. “In the world of early-stage venture capitalists, ‘profit’ is a dirty word,” he revealed – the most important thing is to grow revenue instead.
However, in the gazelle world, the opposite is true: both profit and turnover growth are important. However, Dolgatchov finds a similarity here in the world of gazelles and unicorns. Namely, the attractiveness of a start-up is shown if its turnover has increased by 20% or more every month for six months. “Many start-up founders are very creative in numbers and accounting,” the investor also acknowledged, pointing to the harsh truth that growth numbers are easy to embellish on paper.
Are gazelles so different from successful ones? start-up– about companies? “It seems that it is,” Dolgatsyov answers the question he posed. Gazelle companies are distinguished from start-up companies by the will to grow both turnover and profit by at least 50% per year. According to Dolgatsjov, gazelles play an important role in the business landscape, because the products and services that are used on a daily basis are created by gazelles. “Thanks to gazelles and unicorns, we are in a better world.”
In his presentation, Lev Dolgatsjov also spoke about the importance of the company’s product, customers, potential, value and uniqueness, which, in addition to people and growth figures, also determine the size of a possible investment.
The presentation was recorded at the 24th Gazelle Congress on February 7.
Gazelle movement is supported by AJ Products, Finora Bank and Cumultec.
Lev Dolgachov: In my world, “profit” is sometimes a dirty word
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