Raising funds is an essential step in the life of a young company and it is important to grasp just what is involved in order to get the best out of the entrepreneur-investor relationship.

Interview with Patrice Lamothe, co-founder and CEO of web page curation site Pearltrees, on the sidelines of the Startup Keynote evening hosted by entrepreneurs/web professionals organisation LearnAssembly and digital-focused magazine Maddyness. Under the heading of ‘What investment funds don’t tell you’, the evening brought together entrepreneurs and investors who shared their experience and advice with the audience in order to give them a better grasp of the fund-raising process.

L’Atelier: Pearltrees has raised a total of €8.5 million in several funding rounds. What’s the most difficult phase of the fund-raising process?

Patrice Lamothe: I’d say that the first round is the most difficult. That’s the startup phase, and that funding is what enables you to set the company up. You still have to realise that the following rounds don’t just happen by themselves, far from it. But unlike the seed funding round, subsequent rounds don’t entail any radical change in the company. They come after the initial phase where the startup moves from the project phase to take more concrete shape. Their purpose is to help the company to make improvements, to enable it take risks, basically providing support to something which by then already exists.

During your session, you talked about the differences between US and French investors. Do you think it’s easier to work with one nationality than the other?

Well, there’s no doubt that there are cultural differences between French and American investors, just as there may be differences between a friend from the States and a French friend. However, we mustn’t forget that investors are also people in their own right. This means that you need to choose your investor from a human point of view because s/he’s first and foremost a human being, a person who’s investing in your project. I think you really need to dig down into the basket of investors to find people that you really want to work with. But I don’t think that working with one nationality or the other makes a huge difference. These are people who know their business pretty well and you tend to get quite close to them.

How would you define a good entrepreneur-investor relationship?

I see it as a relationship where each party clearly understands his/her role. That’s to say the entrepreneur is the person who does the work, makes the decisions and takes the business risks.  The investor on the other hand is a person who’s risking his/her money, his/her finances, and who in the end may or may not achieve a brilliant return. But it’s important for each party to realise that it isn’t the investor who’s managing the company. That’s the key. A good investor is someone who provides advice, confidence and value, without ever becoming the entrepreneur. And a good entrepreneur never thinks that it’s up to the investor to make the difficult decisions or take over from the business founder. I think it’s very important for both sides to understand where the lines are drawn.

So, meanwhile, where does Pearltrees go next?

At the moment we’re preparing the beta 2.0 version, so there’ll be some radical changes – changes in technology, visualisation and also functionality. This is a major project that we’ve been working on for the last six months and we’re now hoping to take it to a new stage. Given that at the moment we have several million users, what we’re doing is geared to taking us to the next level, both in terms of capacity and number of users.

By Eliane HONG