Raja Skogland – There is No Business If There are No Sales

Raja Skogland is an entrepreneur who believes in limitless human potential and is dedicated to empowering her peers. Since 2015, she has been helping thousands of entrepreneurs to build their networks, gain knowledge and access capital, enabling them to start and successfully grow their businesses. From 2016 to 2018, she successfully launched and managed Hub.no, growing the online platform to more than 1,200 start-ups. She is also investing in and advising several Norwegian start-ups and entrepreneurs. In 2016, she received a Saphira Award, which honors a selection of inspiring Moroccan female entrepreneurs and leaders. In 2018, Raja she was nominated in the Nordic Start-up Awards’ “Ecosystem Hero of the Year” category. Her fields of expertise are: entrepreneurship, start-ups, business strategy, project management, marketing, sales, growth hacking, leadership, hiring, and networking.   “My gut feeling was telling me:‘Don’t go there, you don’t know them, you don’t KNOW them!’”  Raja Skogland   Worst investment ever Nordic accelerator program looks at social impact companies Raja was attracted to investing in several start-ups that were part of one of the best accelerator programs in the Nordic countries that centered impact start-ups. She has a particular interest in supporting such start-ups to contribute to making the world a better place and putting her money into a good cause. Thirty investors divide three companies among them She had originally been presented with three companies to invest in that had been part of the program over a two-month period and 30 investors were eyeing the companies. So the group of investors were divided in three and Raja was involved with two of them, but she had not looked into the third start-up. Investors grill founders in intense meetings The investors had two months to get to know the founders, meeting them once a week and this would take the whole evening in a very intense atmosphere. During the sessions, around 7-10 investors face single founders or teams sitting in “the hot seat” and challenge them with many questions to understand their business idea, ask them about the market potential, watch how the team interacts and whether they work together, ask what they have achieved with their vision so far, ask about their leadership skills. The investors are trying to make sure they will make a good investment and the founders are earnestly trying to sell their idea, they need money, they need try to secure investment in their dreams. So it’s hard on both sides. Business practice and cultural differences pose barrier Raja had doubts about the two start-ups she was looking at. In fact, she had doubts about all three. Firstly, because they were not based in Nordic countries, but were in the US. Raja prefers closer contact with entrepreneurs so that she can support them and reach out to her own network while doing so. There are many differences in approach between Nordic and US companies, so it was hard to understand many of the metrics that have to be taken into account. There are cultural differences as well, in how to approach the business, the market, and the relationship with the investor. Participating investor friend approaches So Raja and colleagues had been doing the due diligence and getting to know the start-ups, but despite that, she remained unconvinced. Then a good friend of hers, who was also an investor, approached her and said he was really keen on investing in the third start-up. He had been working in the third group with them and had taken a lead-investor position. Not all money is the same As each investor group was separate, those in the other groups had to trust each other’s expertise, insight and understanding, in their reporting to the 30-strong investor group. And while they were all experienced, there were varying levels of experience. Raja says it is very important to find investors with the same fund-source profile; some money comes from family, some comes from business, and with each there’s a different approach, and money is dealt with in different ways. Those with family money may have personal interest in giving back more, as they are carrying the kind of weight of having this money, so they are more willing to invest. Some people have more money to invest than others. So they’re also more willing to take risk. For them, 10,000 euros is not such a big investment. Such metrics need to be taken into account. Trusted friend implores her to bet on third start-up Raja trusted her good friend who was an investor from the third group working with the third start-up. He was very interested in the third start-up and was going to invest no matter what. So he took the position of a lead investor. He was committed and passionate about the vision of the start-up and its team and wanted to involve other investors because he wanted to get more money and move things forward. This start-up required around 100,000 euro. He made a very emotional plea to Raja telling her: “You have to invest!” As humans, Raja says, we don’t always make rational choices. She hadn’t done any due diligence on the third start-up so she didn’t know its potential but she knew she didn’t want to invest in the other two start-ups but was drawn by the opportunity and the first two had great potential in medical technology and big data. Never shun your instincts So the potential was there but Raja ignored her gut and ended up investing in the third start-up. Her instincts were telling her first of all that the company being based in the US was far away and would deny her contributing to support the team and have any kind of visibility on what they’re doing. There was still something bothering her about these even though they do visit Norway and have representatives on the ground. She was still not sold on the idea, but she went ahead and invested in the business and now so of course, when they’re in Norway, she’s “the worst investor in the room”. Stuck with illiquid holding Raja is still invested in the third of the start-up companies because it is hard to get out as there is no liquidity. Around two weeks ago, Raja sent a message to her friend the investor saying she wanted to get out of the investment. Are you going to buy my share? And he said no, and that he was very positive about the team. They are still not showing numbers, sales or any tangible results, and the only reports sent are newsletters and PR about events the company is attending. So even though her friend is positive she feels she is now just carrying around this feeling that she has played herself. Some lessons Make your own decisions about an investment, before and during. Part of that is getting definite satisfaction of all your questions to make sure your money is put into a solid business case. Before and after investing, make sure you see traction, a sales structure, that there is real progress being made. Demand reports that means a lot more detail than newsletters, PR and events a company is attending. Demand to see tangible numbers. There is no business if there are no sales. Ensure sales are happening. Demand to see that money is coming in, not just growth percentages, because they can be faked. Respecting your own metrics. In Raja’s case, her metrics were a team in the Nordic region and one that you have known for years. Trust your gut feeling. It’s very important that if you don’t feel something is right, or that you feel that you’re being forced or pushed to get involved in an investment, even if that feeling is 1% of your total take on the investment, “just get out”. Then you will not be dragging that feeling around with you until the end of your time horizon. Andrew’s takeaways No.1 most common mistake is: “Failed to do their own research”. Having had more than 500 people submit stories of their worst investment, either in interviews or in writing, Andrew says the number one mistake is not doing the research. No. 5 is “Misplaced trust”. Raja put her trust in her friend, the lead investor in the third group of the accelerator program. Not all money is the same. It depends on who is giving it and who is giving it to you as a start-up depends on their objectives and their motives, which can be very different to yours. Different investors think different things look good; one investment may look good to someone, but to someone else, it may look horrible. Completely agree with “there’s no business if there are no sales”. It may sound brutal but this is a very necessary, cold reality to grasp that will save your investing life. Gut feeling is right. Many interviews of many people say that if you ignore your instinctual doubts about a situation, there is a big chance you are going to lose. Actionable advice Do you own homework! No. 1 goal for next the 12 months Raja is building an online course that draws upon her network of experts in the fields of investment, branding, PR, and creating an all-in-one platform for a budding entrepreneur to take their vision to a scalable business. It will be delivered in 8-10 modules, one per week, with a live session, during which you can ask questions. Her team also has a Nordic-based...