Attracting investors

Interview with A. Munhtsog, CEO of Socratus Studio LLC. The company is opening a brand new incubator center for startups. The goal is to introduce system solutions to startups to create a business system capable of realizing their goals in the market.

Would you like to introduce your business incubator center?

Our company's activities are directly reflected in its goals. Our goal is to "create value by creating a business system with organic growth and normal operation by co-cultivating startups." So, we are going to work with the founders and investors of the start-up business to turn the business into a normal business system and then create value. Before opening our incubator, we thoroughly researched the reasons why startups fail. Considering those reasons, it was seen that the problem lies in the system solution. So we have that solution, and we aim to share it with our startup founders to create value together.

Would you please explain the above business system and normal operation?

Creating a business system refers the formation of a fully defined system of activities and goals that can find and solve obstacles and problems by itself. In other words, a functioning business system means an organization capable of achieving its goals.

Why should startups become systems first?

Let's take a car as an example. A few years ago, we used to go to the mechanic because the car was malfunctioning and making noise. Every time, every repairman made many different diagnoses based on his own experience, such as "The fuel pump or the spark plug is not working". We would still change the pump and spark plug according to the diagnosis. There were cases of can't repair it or even can't diagnose it.

But modern cars have changed, and if there is a problem or malfunction, they can self-diagnose and warn that there is a problem here. If business is not systematized, it becomes like the example of a car. Many business does not improve, they seek advice. Then there are many examples where business advice is studied and implemented, but the results are not very good. So, if you first form a business system, you should properly diagnose yourself from the inside and go to the repairman you need.

A start-up is a business that is starting, what kind of system will it need?

It will be clear if you explain it with an example. Let's imagine that we are going to build a house. How many floors the house will have and what it will be used for. First, we describe the house, then draw a picture on paper, and develop solutions for the construction materials and windows and doors. After that, it is built according to the drawing.

If you want to build a house right away and pour the foundation, what if the foundation does not support the intended 20-story building? Thus, the time and money spent on the other foundation will be wasted. Starting a startup can be like starting the foundation of your house. Therefore, we start with the business goals and business models through system solutions.

Helping startups define their goals and business models, right?

No, we don't just help startups define their goals and business models. Through our incubation program based on system solutions, we will also provide the necessary resources for start-up entrepreneurs to focus on the products and services as they intend to present to the market for a period of 2 years.

Providing office and work environment for start-up business owners, as well as providing accounting, office manager, legal, etc. services to support basic business operations. In addition, up to 50 million MNT investment will be provided for the development of products and services and market introduction. There are also networking events to help you reach international markets and connect your business with investments. Simply put, a startup that joins our incubating program is our child. We will support your child in every way to have a systematic way of thinking, be able to achieve goals, and be successful in the future.

Advantages of relying on system solutions?

The above-mentioned cars and houses are examples. In fact, trying to find the root cause of the problem in a traditional way can waste a lot of time, waste money, and eventually close your doors. However, it is important for start-up entrepreneurs to calculate all of these things in a comprehensive way from the beginning, not individually, and systematically and step-by-step, to optimize their goals and business model.

A system solution, or the program we offer, means that we look at the big picture in a comprehensive way and systematically develop it step by step. If such a system is created, any malfunctions in the organization can be detected. In this way, it becomes possible to recognize and correct the problems that have arisen in a systematic way, instead of looking for solutions from all sides. It is common in our country that we cannot find investment and financing.

Lack of investment is the main problem faced by all startups, right?

Among the reasons for the bankruptcy and failure of start-ups, there are many cases of failing to attract investment and closing the doors after running out of funds. The problem is not that investors are not found, it is that investors' trust is not found. An investor is not someone who invests money today and withdraws it tomorrow with interest or profit. They see the future of the business 5-10 years from now. Even if the business idea is promising, what if the company ends up wasting your money without a purpose or system? This investor's biggest risk is not to be cautious. Then, if the business becomes a system that can achieve its goals, investors will come.

Which startups would you like to work with?

We will not work with startups, but with their founders and investors. We have a difference of understanding. Let's say you have an entrepreneurial idea and you've founded a startup.

When you register your company with the state registry, your start-up business becomes a separate legal entity, and you become a shareholder or investor in that company. You will benefit from the growth of the business in which you invest or own shares.

We are saying to startup founders, "If you have a business idea and established startup, we have a solution to make it successful and grow, we have a certain amount of initial investment, let's grow your startup together, let's create future value together." Co-development means that we also become investors. That's why we choose and select the startups we co-develop.

What are the criteria for choosing a startup?

We require people who have worked as a team for 1-3 years and who have spent a certain amount of financial resources on their start-up business with the goal of meeting needs and creating value with a knowledge-based solution that saves people's time and money.

The biggest problem is that team members do not have a common goal. It's one of the top causes of startup failure. Also, the fact that he has spent a certain amount of financial resources on his start-up business shows that the founder has confidence and is capable of taking risks together. My people look for investment because I have such an idea. Well, there are investors called "angel investors" who invest in ideas. They are hard to find. They also see the founder. We are not angels.

What should startups focus on first?

Entrepreneurs and investors should start with their goals. Then we will determine the way to achieve the set goal. If the goal is not united, the problem will not be solved at all. In general, a system means that everything is interconnected. The company also moves forward only if everything is coordinated and integrated. We have this solution.

Thanks for the conversation. Good luck with your team work.

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