The relationship between an investor and an investee is sometimes delicate.
One is fronting up with cash and faith that it’ll go far, the other is taking the money and praying it’ll go far.
So, with these pressures, do VCs and startups have a love-hate relationship? Well, that might depend on who you talk to, but it certainly doesn’t need to be a complicated one.
During the STEP 2016 conference in April we invited three VCs, BECO Capital’s Amir Farha, MEVP’s Walid Mansour, and Wamda Capital’s Khaled Talhouni, and three startups, Fetchr’s Joy Ajlouny, Nabbesh.com’s Loulou Khazen-Baz, and Careem’s Mudassir Sheikha, to debate preconceptions each had about the other.
Moderated by Wamda's Habib Haddad the debate was an enthusiastic discussion about the VC-startup relationship.
VCs are aware of the entrepreneurial struggle
"Every day is a grind," said Farha, adding that fundraising, recruiting top talent and building and executing on their businesses are challenges VCs are aware entrepreneurs face daily.
"Entrepreneurs' biggest waste of time is dealing with us," added Talhouni, "the process of fundraising is probably one of the most value-destroying processes a startup can undertake and the onus is on us [as VCs] to figure out how to make it a much smoother process."
While VCs have a reputation of being demanding, Mansour and Farha were keen to stress that investment is a partnership and to make it work, they need to have visibility on multiple fronts.
Why? Because VCs have bosses as well. Keen to remove themselves from the stereotype of a cigar-smoking investor, the VC panellists said they too need to fundraise, report on activity, and return the cash to their investors.
Other than listening to endless pitches and deciding which startups to go forward with and which to reject, "VCs are the first people who are trying to build an ecosystem", said Loulou Khazen Baz, founder of Nabbesh.com.
"We have a responsibility towards the ecosystem and we are entrepreneurs ourselves. We started building venture capital firms six years ago when no one had heard of venture capitals [in the region]," added Mansour. “We get paid only if we return the capital to our investors and make profits."
According to Talhouni a minimum level is required for success. If he thinks he knows a business better than the entrepreneur then he won’t invest.
While Sheikha hinted at VCs having it easy so far in the MENA with startups running after them, the VCs present agreed that things were changing. "It was very hard for all of us to raise money [entrepreneurs and VCs]. You need to convince other people to give you money because you think you can give it to other people who will use that money better than you," added Talhouni.
Watch the video below for the debate in full.