In 1989 Soviet Union collapsed, so was the Science Academy where I worked. Economy in Estonia had collapsed as well; basic food was in coupons and black market soared. During those days I started one of the first IT companies without any capital. Only thing we did, was some work to Finland against the first computer to get our business started.
When Hansabank started from three founders to grow to a business employing thousands of people, we developed them HR and Payroll system which could be still one of the advanced HR software solutions in the world.
The objective of this solution was based on ideas, how to create a harmonic organization, rather than monitoring employees or candidates which seems to be todays issues in Human Resource Management.
By 1996-1998, we had the leading position in local Baltic States market for our software products and we wanted to move forward.
Meanwhile we had developed our skills, tools and experiences, so it took very little time from us to implement any customer needs to our solutions. Even more, during early days of Estonian economy, there would have been impossible to sell IT solutions that cannot be delivered within some months. No Estonian business manager on those days would not have waited 18 months to get systems delivered, which seems to be standard delivery time nowadays. We had to be quick and cheap to deliver; and we invested lot of our efforts to be competitive on that.
Internet opened us low or no budget marketing possibilities and when we started to get 3-5 interested prospective customers from our website, my objective was to close those deals and grow the business myself. But somehow, I found myself in very interesting situation: We agree our software demonstration; I manage my travels; I wrote the software to customers expectations during my stay in airports and hostels; I go to meeting and after a successful demonstration I had to answer stupid questions, like “how many programmers do I have, who is in management team, etc.”. To my surprise, the answer: “Look guys, I just wrote it for you do you want it or not” wasn’t much convincing them to buy.
So the obvious need was to have a professional management team in my business. But as this costs money, which I didn’t had because I wasn’t able to sell to prospective customers. So, the obvious solution could be to sell some part of the business to Venture Capitalist.
I didn’t had much problems to find interested investors. When I presented them history of our software products, that convinced them, that our products are mature. When I presented them the list of eight hundred interested prospective customers collected from our website and the reasons, why I wasn’t able to close those deals; two signed partnerships: Singapore and Dubai who where extremely motivated to move forward and then I asked $1M to build a company around my software, Venture Capitalists made their offer: please put $20K to escrow within 30 days and we will put rest of $1M asked for 45% of your company.
As I didn’t had $20K in my bank account, I went back to Estonia, tried to raise the money from local investment funds and failed on that within 30 days.
So, I decided that I should do something else where I do not have a need for the management team or find an honest job.
For my surprise, finding a job was impossible because some real idiots called themselves CV people where just humiliating me. I have even heard their theories that 95% of human race is manipulative by them, while 5% are just psychopathic and should be sent to mental institution. In Nurnberg, we sent Nazis to death for such kind of theories…
While Internet had opened new distribution channels to media, my choice was to produce media again which I was doing during early days of my life. But in 2002/2003 music wasn’t much a way to make living. Thanks to MP3, everything was free. So, my choice was low budget filmmaking. Video on Demand with Pay per View offered an excellent distribution for niche market low budget production, offering investors good ROI as well. And surprisingly, I didn’t had any problems to find half of the money for those projects from Europe but everyone there expecting co-production projects.
But in US, it seems to be easier to raise $5M for any film project than few hundred thousands I needed.
Since 2008, Apple have offered excellent distribution channels for music, mobile applications (which should be considered as media nowadays) and possibly for digital films in near future as well. Obviously this market is my target and I have spent several years to talk with the players, understand business model, competition, etc. And I do not need Venture Capitalists to go there, simply one MacBook would have been enough for me to start.
But not much persons understand such kind of simple things nowadays.
Being back in Estonia, I noticed that any technology start-up should go there thru boot camps, mentors, investors to get government grants before even considered to be viable. What a waste of time.
So far my experiences to get any investor involved are:
Maybe Estonians should learn from Dragons Den rather than Silicon Valley from early 80ties where money could be raised just for the ideas. And when you can deliver better results alone, you should never hire employees. Just do It!