If you are an investor, entrepreneur or you have an interest in the startup ecosystem, you might have already heard about Smart Capital.
The smart capital can be defined as the capital contributed by sophisticated investors who bring not only money, but also knowledge. In other words, it is a monetary investment, which also offers knowledge and interesting contacts. Getting this type of investment can be a key to the success of a startup and will be an increasingly important distinguishing factor.
According to the Dow Jones VentureSource Report, European startups collected 3,3 billions of dollars from venture capital only in the third quarter of 2015, representing an increase of 31% over the same period in 2014.
“European startups collected 3,3 billions of dollars from venture capital only in the third quarter of 2015, representing an increase of 31% over the same period in 2014”
In this scenario, the startups are increasingly seeking investments with higher values and, in order to stand better chances of succeeding in a highly competitive environment, the contribution of the new partner is essential, helping to adapt the business model and the best path to follow for rapid growth.
A good investor, with a strong profile of smart capital, would be one that is available for its investees, constantly offering its business vision, experience and advice. Knowledge of subjects such as human and financial resources, leadership, management of technology and best practices in sales are key to the success of companies, but they are often little known by startup founders, who may be young brilliant and innovative, but with little experience in managing a business.
An investor with smart capital also helps its investee connecting with potential customers and other contacts that could be useful to them, since this type of investor usually has a broad network and is well known in the sector.
Managing the smart capital
Normally, the investor will not be in the daily business, but should be able to help with insights that make a difference at key moments, contributing to the decision-making and, consequently, to the expansion of the company.
To be able to offer both knowledge and information, the investor needs to be informed and know well the company in which he invests. The difficulty is precisely to manage this information, as the investor usually has a wide portfolio with different companies he/she has invested in.
It is therefore necessary to optimize tools that automate the relationship management, centralizing the information in a simple and organized way. An investor who wants to bring smart capital, has to know the businesses evolution, their numbers, to follow the sales, profits and results, to accompany their most important decisions, know about their positioning and what direction they are going.
“The investor needs to be informed and know well the company in which he invests, but the difficulty is precisely to manage this information, as the investor usually has a portfolio with different invested companies”
In addition to facilitate the maximum information from the investee to the investor, the company should have some communication mechanism or tool to facilitate obtaining smart capital. It is useless to have in the list of shareholders a group of investors with a high potential of contacts and valuable information for the company, if there is no mechanism, process or tool that can organize such information. This tool should also facilitate ways for the investee to motivate the investors who claim to bring some smart capital.
How to get smart capital?
The first thing that a startup looking for that type of investor should do is not evaluate just the amount of the investment and its valuation, but also analyze other possible advantages that the investor can offer. There is a term derived from the smart capital, which is the Smarter Capital; it means to make a comparison between potential investors, evaluating pros and cons, to discover what will be most useful for your business.
These investors are often highly connected and present in social networks and major industry events. The most important event on the smart capital in Spain is the Smart Money, organized by Loogic.
“Smarter Capital means to make a comparison between potential investors, evaluating pros and cons, to discover what will be most useful for your business”
The first edition of this year will be in Madrid on January 25th at CaixaForum. The meeting brings together leading investors and entrepreneurs in Spain. It is the best opportunity for entrepreneurs to find investors to participate in their projects wisely and for investors to find good projects in which to invest (read more in http://smartmoney.events/).
Private Investments Network participates as one of the main sponsors of the event to present a web platform that helps strengthen the relationship between unlisted companies and their investors and potential investors, improving communication and smart capital. To learn more about the solution send a message to info@privateinvestmentsnetwork.com.
Fdo. Helena Lopes