What You Should Consider When Starting with External Capital

About this episode

Andreas Etten is an experienced entrepreneur who founded his first company in 1996 and now operates as an active investor. In the Jungunternehmer Podcast, he shares valuable insights on what founders should consider when seeking external capital for their startup.

The Role of Luck Versus Hard Work

One of the first questions that comes up in the conversation: Do you need luck as a founder, or is hard work enough? Andreas brings a balanced perspective to this topic. While hard work and perseverance are essential, the right timing and suitable market environment also play an important role in a startup's success.

From Founder to Investor: Andreas' Journey

After founding his first company in 1996, Andreas evolved over the years from an operational founder to a strategic investor and advisor. This transformation allows him to understand both sides of the coin today – both the challenges founders face and the expectations of capital providers.

As an advisor, Andreas brings not only financial resources but especially his network and experience. This combination makes him a valuable partner for young companies that need more than just money.

The Power of Networks

A central point in the conversation is the importance of a strong network. Andreas emphasizes that a good network is indispensable for both founders and investors. Through the right contacts, you gain access not only to capital and customers, but also insights into future trends and market developments.

"Through your network, you see tomorrow's world," Andreas explains. This perspective helps make the right investment decisions in time and, as a founder, find the right partners.

An Investor's Selection Criteria

When evaluating startups, Andreas looks at various factors. Besides the business idea itself, the team, market size, and timing play crucial roles. Particularly important to him is that founders have a clear vision and are ready to implement it consistently.

Equity Distribution: Less is Often More

A critical point for every founder is the question of how many shares to give away in early financing rounds. Andreas advises caution: "Especially at the beginning of the founding process, you should be careful not to give away too many shares."

The reason is simple: in later financing rounds, additional shares will be diluted. Those who were too generous in the first round might later find themselves owning only a small portion of their own company.

The Value Creator Must Be Rewarded

An important principle that Andreas advocates is: "The value creator must be rewarded for it." This means that those who actively contribute to the company's success – whether through work, capital, or strategic support – should also be appropriately involved in the profits.

This philosophy should be reflected in equity distribution and serve as a guideline for negotiations with investors.

Book Recommendations and Learnings

Surprising were Andreas' book recommendations, which show that successful entrepreneurs often look beyond their immediate field and engage with topics beyond pure business.

Conclusion: Start a Company, But Don't Do It Alone

Andreas' closing words capture his philosophy perfectly: "Everyone should start a company and not do it alone." Starting companies is important for innovation and economic development, but the path to success leads through strong partnerships and a good network.

For aspiring founders, this means: find the right partners, be conservative with your shares, and build a strong network early on. External capital can be a powerful lever – but only if you know and follow the rules of the game.