We talked to Shahid Chisty an hour after we finished filming and talked about what question he wished were asked that could help founders on the topic of capital and startups
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since being on the program, what some information that you really wanted to mention that you didn't have a chance to all on the show,
actually, one of the things which I would recommend startups and founders is, is to to be generous. And I mean that in the following way, I've seen a, and worked with a couple of startups and invests investors as well, angel investors, for example, as well. And they have an interesting strategy, which I think is the background to their success, namely the that they've taken the attitude of look will will give you will give you a big incentives so that that incentives always prompt people to try and do their best.
So for inviting said, that can be almost anything. Yeah,
I in this case, for example,
you know, we, we've worked with groups as well who make introductions to investors in certain countries, China has one example. And if you think that multiple startups are talking to these groups, and then if one and they'll give you perhaps, you know, typical ranges of the, the sort of commission structures, fee structures that they might have. And if one company is quite generous in that respect, just as you know, if you think about it person yourself,
if one company is offering more than the others, the likelihood is that group will, will be incentivized, you know, to do their utmost for that company, because they will be rewarded for it as well. So, I've seen some strategies like that, that that really struck me as being very successful. So you're saying generosity
other than salary, and possibly equity in the company. Are there any other ways to be generous,
including, with, for example, board advisors, encouraging mentors, just actually know people who could help you with the business, if you incentivize them, rather than trying to negotiate down to the smallest
Nicole Nicole of dying, that you can, you can negotiate that you what I noticed is that as example, these people that I've worked with, before, they've really got people motivated to, to try and help the company and the staff up as hard as they could. So question or that motivation, if you're giving away that much your company,
what's the left though, you should be scared of that? Or is it grows so fast, hopefully, everyone still went, yeah, that's
that that's a very good point. And actually, that that comes back to some of the subject matters that we were talking about the media, you know, the VC industry, the alternative routes of funding and financing that have a reason crowdfunding For example, I, CEOs, and even in Silicon Valley among the VCs themselves there, I'm hearing also much more about people saying that the typical the old VC model is broken. Tell me about that. The Yeah, the background to that is that the the usual route has been for people, startups, early founders to go to the VCs, they'll get their funding, though how large portion already taking in equity by the VCs as they go for each subsequent round. And more and more of the equity is taken up, hence our saying that so ideally, you try and bootstrap as far as as possible.
And the in the old route. Also, it ended up being the case that founders perhaps only had a few percent left of the company that they created of the idea that they had, and that's a great chain. The other the other side of the coin, also is that there, there have historically also been very little limited opportunities for people to, to get him in to get the opportunity to invest in interesting startups. Even if you think of companies like very successful tech companies like Facebook and others, it's really only a very small club that even had the opportunity to get as an early stage. And therefore, with the new technologies which are coming about the that there are strong
attempts be made to try and enable
your Joe public really to get involved. There are regulatory
frameworks in place. So which, which limits how far one can one can undertake that strategy. So you're telling me before, sorry
to cut you off. But Facebook, even crowdsourcing was available at that time
had so few people actually had access to it, maybe no one, the general public still would have had a chance, that'd be a fair thing to say, Well,
I think that with crowdfunding in particular, it's, it's a very well suited for product based companies that are targeting their products that consumers so for example, you know, if you're doing an educational robot, which is
this company called Ruby, for example, that is looking to sell educational AI companion robots. So for three to seven year old children, that company would be ideally suited to undertaking a crowdfunding in order to be able to develop its product to to an MVP status.
But coming back to the Facebook example,
again, there were there were very few people
and investors who, who had the opportunity to get in until the company actually went public.
So it was literally a moat just a handful of people and those those investors or people themselves were already you know, very well can capitalized. So your, your everyday investor, including
large numbers of so called accredited investors in the US really only see some deals at very late stage. And that's, that's in my opinion, also one of the reasons why crowdfunding has taken off and in particular, actually, more recently, given the technology of these initial coin offerings that has really opened the doors to the general public to get involved at a very early stage and a lot of startup companies interested now for these crowdfunding or these Icos what type of due diligence is done? And I guess before answering that could you talk a little bit about what due diligence is due diligence is essentially being able to check on the company to to see in detail what is it strategy What is it promising how's it planning on executing its strategy who are the team members involved what sort of documentation is in place so it's really if you if you like looking at the nuts and bolts of the company and then being able to decide Yes, this is something that I'd like to invest in on you know, this is something actually which I thought initially was a good idea but having looked in detail actually I don't want to invest in it perhaps. So with Icos
I think there is room to improve the due diligence process.
However, even having said that, even in the venture capital model, you'll have different sorts of investors some investors will be experts and they will do detailed due diligence they will know exactly what they're looking for. There are other investors perhaps who would base their decision on what some of those experts investors are finding in the due diligence process and they will then for example, come in as co investors and it's a symbol similar thing actually with the Icos know some some investors will know what the what to look for other investors may be a bit more naive
in the Icos in particular the information which is generally provided is on a website
shake. Can you go into detail about what a white paper is and the information that would be on it. So send
me a white paper is generally going to be the document which startups that are undertaking an Ico show to the potential investors or token bias. And essentially, the initial white papers that were produced were very technical papers demonstrating to the interested investors or buyers of the tokens, what the technology exactly was behind, for example, the blockchain that was being developed over time. And actually that information is involved more into a marketing style of document. But initially, the idea was that experts could even have a look at the white paper and they were invited actually even to see if they could find any flaws in the technology that was being developed interested. So I
wanted to get access to a white paper, how would I go about doing that
the white papers are typically listed on the on the company's Ico webpage, they'll typically be a link to see the white paper so they are generally freely accessible,
interested in what other documents from marketing material does a company have, when they want to do an Ico
that's a is usually the extent of it. But the the websites that are being developed nowadays are also quite extensive, providing information on what the companies trying to do, who the team members are the the timing, for example of the fundraising, that it's on the undertaking or token sale that it's undertaking so so essentially really the website and the white people great
Alright, so you don't take up any more your time. Thank you for the Silicon Valley success after hours podcast video
pleasure speaking with you. Thank you very much.
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