Sergey Kartashov: Successful investors should not follow the rule “make money fast”
To be an investor does not mean to hit a huge profit in a short period. Ups and downs always accompany whether an investor or a founder. But their investment performance depends on the objectives they put into achieving and strategies they develop to accomplish. Unfortunately, there is a misunderstanding among investors when it comes to picking up a promising startup and making quick money. But it is not an approach they should follow. Sergey Kartashov, the Senior Partner at technology company Roosh, highlights the main mistakes almost every newcomer to the investment market makes. Also, he gives some pieces of advice on how to predict pitfalls and not to fail.
The investment market, as well as the IT market, is going through drastic changes, as Sergey notices. But, at the same time, it is gradually improving. It is also evident how more founders and entrepreneurs are leaving the idea of gaining an immediate income. Instead, they focus on contributing to the ideas and long-term values. Today, the market incorporates about 900 companies, but only 300 of them have stood out and proven their perspectives to the longest future.
The investment market is a competitive ring where each project is contesting for gaining a chance to win. Accordingly, not every startup can become a unicorn. Sergey Kartashov explains that it is essential to provide a thorough analysis of a startup before investing in it. The common mistake made by most young investors is the lack of knowledge of the market. Sometimes, it is useful to monitor the activities of giant foundations like Sequoia Capital or Andreessen Horowitz whether they approve such investments.
Second, finding a prospective investee is a responsible process that can take a long time. Young investors often strive to look for skilled and experienced staff. This willingness is not bad. But on the other hand, they forget about other crucial aspects. For example, whether the project team can monetize their idea or create a competitive business plan. Sergey Kartashov comments on the fiasco of the first project of Restream’s founders. Their service for broadcasting paid educational webinars, Tutorsband, could live only four years and spent $480,000 of angel investments. The Roosh partner notices that its failure explains the lack of business expertise of the founders.
Next, it is essential to find out whether the startup team is able to delve into the legal intricacies of its industry. They should have scenarios to deal with a crisis and be ready for serious legal challenges. If their experience is not enough, the task of the investor is to help them get into the matter. This point is very vital before making an investment.
Sergey Kartashov underlines that investing money in ideas is pretty risky and will be in demand in 5-10 years. The investor needs to consider all advantages and disadvantages, estimate the market, and analyze whether the infrastructure keeps up with your revolutionary idea. On the other hand, they should wait until the product is implemented in everyday life. The young investor should keep in mind that excessive hype does not affect positively but might lead to additional risks.
Thus, Sergey Kartashov advises novice investors to carefully choose a solid and reliable team with significant business, legal, and organizational skills. In addition, they should select an industry they are familiar with and keep a constant interaction with a project.