What do you need to launch a start-up like Farmy?
Tobias Schubert: You have to be passionate, keep a cool head and do some serious market research: is the idea really viable? So you have to find the energy to actually implement the project.
So is it the team that makes the project successful first?
Mike Baur: To me, the phrase “people is everything” is absolutely correct. A large team can make an average project successful. So an idea can be great, but if the people behind it don’t measure up, it won’t take off.
Verena Kaiser: We also consider the team essential, wherever the company is in its development. We support operating companies through a diversified customer base, so team development should already be visible and tangible. This is an essential condition to make the company scalable and attractive to investors.
As Farmy co-founders, are you still on the same page? How do you deal with conflicts?
Tobias Schubert: Sometimes we disagree on crucial issues. We then use the principle of “constructive disagreement according to Ray Dalio”. If I say “yellow” and roman “green”, each of us should give the other as many arguments as possible. At the end of the day, we must together recognize the solution that is objectively the best. None of us has the right to believe we are always right. As in a working couple.
Mike Baur: Our experience shows that this is an important point: there are often “technical co-founders” who have done the same studies and still have the same opinion. There is often a lack of a “commercial co-founder”, outside the seraglio, who questions the project in a critical but constructive way.
What are the typical mistakes made by startups?
Verena Kaiser: Many tend to only partially translate their growth strategy into their financing plan and underestimate ongoing cash planning.
Mike Baur: The legal aspect is also important and often a source of error: legal form, shareholding, etc. The growth strategy can also reveal shortcomings: for example, those aiming for very ambitious or rapid growth can scare business angelbecause they will quickly run out of money.
How did you convince investors?
Tobias Schubert: After a first phase in which we had to gain their trust, things went very fast. Well-known investors arrived relatively early: Adrian Bührer, who created Students.ch, as well as Myke Näf, the founder of Doodle. Other Swiss entrepreneurs and investors have joined us, for example Martin Jucker from Jucker Farm or Ruedi Noser, politician and entrepreneur in the IT sector.
Roman Hartmann: We must not forget that, while prospecting for customers and investors, we also actively sought to establish contacts with farmers. For us, they are not just suppliers, they are partners.
Verena Kaiser: Farmy has made an exemplary path for a start-up. She made several contacts and built an increasingly dense network. It takes perseverance and intuition to choose the right partners.
How does UBS support startups like Farmy in finding investors?
Verena Kaiser: As the world’s largest wealth manager, our clients include investors willing to put their money into innovative and promising start-ups. We also know the start-up market very well. We benefit from networks and can put start-ups in touch with the right investors.
Are professional investors only interested in start-ups that are considering selling or even having an exit strategy?
Verena Kaiser: Of course most of our investors pursue this medium-term objective. These are precisely institutional investors, whose basic strategy is to invest and then sell. A start-up in search of external capital must ask itself the question of exit, which must be viable at a given time. Many of our private investors were once entrepreneurs and know what it takes to start a business. They generally have longer and stronger backs.
Mike Baur: I see it the same way. Insofar as business builder, we work closely with companies and invest new capital in their growth. Of course, the venture capitalist’s strategy is to be as profitable as possible. These “sharks” therefore trade fiercely before investing.
In the start-up world, we talk about the “5th grade trap”: this is where many neophytes fail. Why?
Verena Kaiser: After five years, many companies undergo a transformation. The inventor at the origin of the idea, and who managed to implement it during the creation phase, may not be the CEO who can take the company to the development phase. In the companies we support, this period is often crucial for the company’s sustainability. Investors are looking closely at whether startups can approach this transformation professionally. Creators should then be able to walk away.
Mike Baur: I also think that this “5th grade trap” exists. Investors then expect to benefit from the effects of growth and economies of scale. But many startups fail at this point, because founders struggle to leave the reins of the company to more competent people. The first five years of Farmy can be considered exemplary, but now we have to face the next five, which will bring other challenges. Above all, don’t rest on your laurels. Entrepreneurship is a marathon, not a sprint.
How are you living this 5th year at Farmy?
Tobias Schubert: Business is really changing. It is very important to always ask yourself if you are still the right person to take the business forward. Roman Hartmann and I have the advantage of having worked in both start-ups and large companies, as founders or managers. We can therefore develop Farmy properly even in its growth phase.
Roman Hartmann: The moment when a growing start-up establishes a new level of management that requires hiring outsiders is really a turning point. For the first time, others are entrusted with the management of certain employees and certain services.
What does this transfer of responsibilities mean to you?
Roman Hartmann: On the one hand, you have to learn to lead managers who have a managerial role and give them the leeway they need. On the other hand, it is necessary to carefully choose the people who will perform these management functions. In addition to technical skills, they must have a willingness to take the company’s philosophy and a practical approach. They also play the role of business developer and they must dedicate themselves to it in the long term. As founders, we need to understand their mid-term motivations and professional projects and constantly reconcile them.
Will Farmy finance its next stage of growth through existing investors or will it look to other players?
Tobias Schubert: We don’t want to put all our eggs in one basket. For early investors, who have contributed up to 50,000 or 100,000 francs, it is usually not very interesting to re-inject funds, because they would have to pay a larger amount. But our networks can bring us new opportunities: they open doors for us regularly.
Verena Kaiser: We fully support this approach. It is the company’s own network, combined with our contacts, that is the most promising.
Mike Baur: I advise any entrepreneur to be active. You should always have multiple options as an investor can also withdraw at the last moment. An investor only truly becomes an investor when his money is accounted for.
The risk of failure still persists. What precautions did you take?
Roman Hartmann: Of course, we risk a lot, as husbands and fathers too. In the event of failure, we will suffer much greater financial damage than if we had continued our managerial careers as employees. But all entrepreneurs take that risk.
Verena Kaiser: Covering loved ones is important. It should also be clarified as soon as possible what would happen to the company in the event of absence or death following an accident or illness.
Roman Hartmann: We cannot exclude all risks. Being an entrepreneur is a philosophy. There is no guarantee of success.