There is no doubt that entrepreneurship is a major driver of economic activity. Creating a completely brand-new business from simply an idea is what inspires millions of new business owners. The impulse happens to have also inspired such pivotal companies as Facebook, Google and EBay. But, does that mean that every start-up business will necessarily be successful? And, by the same token, does that mean that an investor should choose to invest in every business or business idea that “sounds good”? The answer to both those questions is a firm no.
Despite the success of companies like Facebook, Google and Uber, most startup businesses never find that golden path to wealth and success. In fact, whether it’s unfortunate timing or a concept that is just not original enough or some sort of fundamental organizational issue, many start-ups fail.
Which makes the task for investors of choosing which startups to finance and become involved with all the more challenging. What’s the best methodology to use? What are key red flags financiers and investors should watch out for? And what happens if you as an investor are really not familiar with the industry a startup is working in? Does that mean investment shouldn’t be a possibility?
Each of these questions are important and ideally deserve the guidance of those who are seasoned in the business of financing early-stage start-ups. Business entrepreneur, Riaz Mamdani, may be a perfect fit for providing this sort of guidance. Current CEO of Strategic Group, a Calgary-based commercial real estate investment and development firm, Mamdani has years of experience in financing and assisting the development of start-up businesses in numerous industries, including technology, oil and gas, telecom, and construction. He successfully has lead two private companies from concept stage all the way to international public corporations listed on the NASDAQ National Market, which certainly speaks to his ability and financing acumen.
What kind of methodology does Mamdani use in selecting what businesses to become involved in? As it turns out, although this executive doesn’t follow a set methodology, there are undoubtedly certain qualities of a startup he evaluates.
“There are two things I consider when thinking about providing capital to a business,” says Riaz Mamdani. “The first is the calibre of people involved in the venture. I have found that honourable, ethical and hardworking management are absolutely critical in a startup venture. Management must be good people and fully committed both economically and emotionally.”
Secondly the business plan must be achievable but bold. “The plan must be realistic and sufficiently optimistic to get me excited. Creating an average, lackluster business does not interest me in the least.”