[The Typing Baker] Founders and Investors: Close Yet Distant... A Guide to Bridging the Gap

Tension Continues from Investment to Exit
Conflicts Arise from Differing Expectations for "Growth Speed"
"Active Communication Is Key to Achieving Shared Goals"

While there is no single correct answer in business, the meeting between a startup "founder" and an external "investor" is essential for a startup to become a unicorn (a privately held startup valued at over 1 trillion KRW) or to succeed in an IPO (initial public offering). By nature, startup and venture investors take on high risks by investing in startups with many possibilities. In return, they pursue a "high risk, high return" strategy, aiming to reap significant profits through an exit (capital recovery) if the company’s value grows. For venture investors, the typical goal is "to invest in ten companies and have one generate returns dozens of times over."

The problem is that the tension between the two groups continues from the moment of investment until the exit. Sharp criticisms such as "investors are obsessed with money" and "there is only a fine line between a fraudster and a businessperson" are sometimes exchanged. The biggest source of conflict is the difference in the "growth speed" that each side expects.

Founders want to change the world with their ideas or technologies. While money is important, innovation itself is the primary motivation for founding a startup. On the other hand, venture investors are attracted to bold attempts, but their ultimate goal is not innovation for its own sake, but "profitable innovation" that allows them to recover their investment. Although the two groups are in a symbiotic relationship and need each other, their fundamental differences in perspective make complete understanding difficult.

The newly published book "Founder and Investor," released this month, is a practical guide designed to bridge this gap and help both sides understand each other's perspectives. The book is co-authored by Jeon Seokwoo, who worked in startup discovery and investment at a financial group, and Tujal (pen name), an active venture capital investor. Drawing on their field experience and insights, the authors, who have identities as both founders and investors, present a balanced view of the differences between the two groups?this is the book’s greatest strength.

The book is organized into four stages following the lifecycle of a startup. It covers in detail the journey from initial team formation, first investment round, contracts and growth processes, to the final IPO or M&A (mergers and acquisitions). At each stage, it contrasts the differing perspectives and concerns faced by founders and investors.

It provides concrete answers to practical questions that arise in the Korean startup ecosystem, such as what investors really mean when they say "ideas are not important," why investments involving government funding can be burdensome for investors, how to determine when a pivot (business transition) is necessary, and the impact of collaboration with large corporations on startups.

The book also offers practical strategies for cooperation between founders and investors. After securing investment, the first priority for founders should be to systematize company operations. Tasks concentrated on the founder must be structured and converted into standardized systems that anyone can execute. This can then be followed by talent recruitment and inter-company collaboration.

Ultimately, while every decision is up to the founder, the wisest choice in the scaling-up process is to strategically leverage the investor’s assets and network. Investors are experts who can quantitatively analyze a company’s finances and business structure, and they possess expertise in areas such as finance, tax, and law, as well as networking capabilities. The more actively both sides communicate and make requests of each other, the closer they come to their shared goal of "increasing equity value."

The book emphasizes that the key to the startup-investor relationship is "recognizing each other's diversity." "You must acknowledge that every individual has different values that they consider important in life. Only by accepting the 'diversity of life'?that everyone pursues a different kind of life?can you understand what investors say and what founders think."

Founder and Investor / Jeon Seokwoo, Tujal / Pajit / 324 pages / 22,000 KRW