The Investor’s Mindset: A Speaker Series Session with Rawaz Rauf

Have you ever wondered what goes through an investor's mind when he or she is looking for the next great startup? In February, we had the opportunity to get a first-hand look at this thought process when we hosted Rawaz Rauf for our Speaker Series.

Rawaz is a seed investor of Miswag and Alsaree3 and has been working in Iraq with his family in the telecommunications, insurance, and construction sectors. He is also the co-founder of a tech company specialized in enabling the distribution of electronic vouchers across Iraq. He currently manages new investments at Hiwa Rauf group of companies. He shared his methods of investing and thinking with us during our Speaker Series session, and he started by defining investment in a non-academic way.

“An investment is that extra money you have and how you decide to keep it in a safe box, at the bank or, invest it in a car or an apartment or anything else. The more return you expect, the higher the risk.”

In his views there is a positive correlation between risk and return but he sees that in Iraq and Kurdistan, entrepreneurs have an advantage in the market. They have the benefit of not being in a highly competitive market, and the government promoting startups and new businesses. He commented, “many years ago, it was harder to pick up an advanced tech idea and turn it into a business, which was due to the restrictions of the internet, and lack of tech knowledge.”

Rawaz emphasized the fact that ideas alone don’t matter and anyone could have an idea, but rather it is the work that the entrepreneur puts into the idea.

“ To an investor, a startup that is familiar to the markets around is much easier to introduce than something completely new.”

He mentioned, and emphasized, the advantage we have in this region of having many ideas that were previously implemented abroad that we could start here.

According to him, investment should start from friends and family even though it is taboo to many people. He mentioned that the more people believe in you and your business, the more attractive you get to an investor. As he said, he would not invest in a business alone, but along with other investors. That lowers the risk for both the investor and the entrepreneur.

“These entrepreneurs could take a role and be the ones that add to the market and change it. Failing once or twice should not make an entrepreneur lose hope, but it should only be lessons to learn from.”

Rawaz mentioned the importance of the stage that the business is in for an investor when they consider investing. Because the earlier the startup's stage, the higher the risk of investment is. He would personally wait for the minimum viable product before considering an investment, which most investors do as well. It is also crucial for investors to invest in their comfort zone, which is the field they are familiar with the most and their area of expertise. The investor should not take the outdated traditional ways of investing, including taking the manager role. But instead, he or she should be the mentor according to one's experience. Not having laws that regulate the non-voting shares versus the voting shares is one of the problems that entrepreneurs face in this region, but he also mentioned that having a number of investors would prevent that from happening. 

An entrepreneur's commitment to the business matters the most to him and is one of the main factors that help make his investment decisions. He believes It is also essential to always consider employee stock options, which gives the team an incentive to keep improving and a sense of ownership. 

Rawaz also highlighted the importance of what and when the investor should expect profit in the short-term, which is not something he expects from a tech startup early on. For tech startups, the most significant positive sign is growth in sales and number of customers.

Rawaz underlined the importance of the entrepreneur knowing what they want and their specified financial plans. 

You can now watch Rawaz’s session with Five One Invest on our Youtube channel in Kurdish here.