If you ask the general public to talk about football transfer deals, or startups raising investment, I think you are likely to get the same sort of response.
They will know about the big deals, the multimillion pound moves in the Premier League or the unicorns (companies worth more than $1bn) who float on the stock exchange.
These are the deals that attract attention — but there is so much more going on under the surface. Even in those big deals, there is far more to them than money.
More than money
There are many similarities in the process of choosing a club and choosing investors for your business. I was fortunate to make some great moves in my football playing career, the most famous of which being from Fulham to Manchester United.
To an outsider, it may seem like the fee is the main element in the decision as to which club you go to but, just like choosing investors, it is much more complex than that. It depends on your age (seed round or IPO), your position on the field (market) and your character and ambition as a player (entrepreneur).
Do they have the right mindset and philosophy to help the business grow in the way that matches our vision?
When I was deciding on moves in my playing career, I would look at lots of different factors. Obviously, the salary was important, but I became a footballer because I love the game. I always wanted to make sure that I would get ample opportunity to play and in a style of play that suited me. I would consider not just the manager that I would be playing for but the players I would be with. I wanted to play with players I could imagine myself enjoying daily training with, because they were tough and seemed like nice guys. If the majority of the squad loved to attack, smile, win and progress, that would guarantee my needs would be met in terms of respect earned in a meritocracy.
The manager was so important. I wanted to know that I would be able to learn from him and that he would have a good management style to motivate and challenge me. Then there was the location of the club — I had a young family for most of my playing career, so I wanted to make sure that they would be happy wherever we moved to or that I could easily commute back to them so as not to uproot them at key stages of their schooling.
As we go through our investment journey with my own startup AxisStars, I see parallels in choosing the right investors. Yes, there are VCs who will bring substantial investment, but do they have the right mindset and philosophy to help the business grow in the way that matches our vision?
Are you really going to get the game time you need to make a difference?
Spray and pray
You hear about the ‘spray and pray’ strategy of some VCs who diversify their investments and know that they only need a few to succeed. This could mean that they are not focused on your business in the right way. It’s like being part of a huge squad at a club — are you really going to get the game time you need to make a difference?
We are here to do good whilst doing good business. It’s of utmost importance to us that we make a significant difference in the lives of our pro-athlete and entertainer members. We see all too often a player choosing a club based on the fee or the kudos it will give them, only to find themselves sitting on the bench every week — or massively unhappy living in a city away from their families where they don’t know anybody.
It’s easy to feel flattered by the attention of a club (or an investor) and think that you need to take the first offer in case you don’t get anything else. But you need to think about your long-term future. Will this investor support you in the growth of the business? Is there room for you to develop at the club and are they prepared to give you guarantees that show they think very highly of you?
Once you are signed with a club, you’re involved with all elements of it, with commitments to all stakeholders.
What do they stand for?
Although you will mainly interact with the manager and team, you also need to think about the club overall. Who are the owners? What do they stand for? The recent events with the European Super League show that money is not more important than integrity. What are the fans like? Some let you live your normal life when others really think they own you. Who are their commercial partners? These days more than ever, it is important to know how brands conduct their business. Once you are signed with a club, you’re involved with all elements of it, with commitments to all stakeholders.
It’s the same with investors. You may get on well with a particular investor but what else has he or she invested in? We saw a couple of years ago the negative implications for Soul Cycle in the US when its (majority liberal) customers discovered that one of its main investors was a Trump funder. It’s really important to do the due diligence on how this investment could impact your business in the long term.
Active and passive money
We’ve been advised that when raising funds, it’s key to get a mix of active and passive money.
Active money is invested by people who bring extra skills or experience to the table and may sit on the board or advisory board. They are likely to invest larger amounts and work with the company to ensure they get the best return.
Passive money could be from supporters of the venture, who don’t necessarily have the time or inclination to get involved. We’re hosting a round on Seedrs to enable our Star members to invest any amount that they want: this means that the people we are working to help will own a stake in the business without having to make much of a commitment.
Selecting investors or a club is like a marital engagement
Selecting investors or a club is like a marital engagement and it’s key to anticipate their character, weaknesses, strengths and most importantly their vision. If you can find a combination that fits well with yours, happy days! Gut feelings help, but the only issue there is members only become super reliable with experience — and you need a mix of good and bad ones to really test it.
I don’t have many regrets regarding the clubs that I chose in my career, rather the way I managed certain decisions when at clubs. The entrepreneurial life is a tough challenge that I’m really loving. In this second chapter I’m better equipped and supported so I’m hopeful I can make the same title winning decisions in business.
Louis Saha is founder and CEO of AxisStars, a platform that connects athletes and entertainers to industry professionals. He was a professional footballer for teams like Manchester United and Tottenham Hotspur.