Independence matters more than financial capital
More than 34 funding rounds of over CHF 10 million have taken place in the canton of Vaud over the past five years. But financial values are not enough, argues Antoine Lorotte, founder of FiveCo.
In a leaflet entitled vaudinnove.ch, we learn that more than 34 funding rounds of over CHF 10 million have taken place in the canton of Vaud over the past 5 years — that is CHF 1.2 billion injected over the period. A caption reads: "Access to capital is among the essential parameters for the viability of any innovation-centred ecosystem." A hasty reader might conclude that there is no innovation without funding, and that the former systematically flows from the latter — or even that an increase in funding volume will automatically produce a surge in innovation. Alas, the reality of the business world is far more complex. No financial magic wand will ever be capable of making innovation spring forth. There is one fundamental reason in my view: in the hierarchy of a company's values, independence is a far more essential condition than financing. Here is why.
Independence as a prerequisite
In biology, Darwinian natural selection is always said to have played a fundamental role in the evolution of species. This logic can easily be transposed to the business world, and particularly to start-ups. Let us imagine an unreal world in which funding would be easily accessible to any young company. While this opportunity would make life easier for beginning entrepreneurs, there is nothing to say that their capacity for innovation would be multiplied tenfold. First, there would be no way to apply market selection to genuine innovations — those that bring added value — since some companies could continue to exist through their funding without ever having truly proven themselves. Furthermore, this could even have a counterproductive effect, as beneficiaries would have less incentive to push themselves to innovate: why push boundaries when one is in a comfort zone? On the contrary, a young company that has not yet found sufficient love money, business angels, generous investors, or even public subsidies is quite simply compelled to innovate. It finds itself plunged directly into reality. This uncomfortable situation will then drive its founders to surpass themselves, take risks, and bring truly disruptive and never-before-seen solutions to market. Having preserved their independence, they will be more focused on satisfying the market than investors. Finally, by remaining independent, the young company retains two elements essential to its genesis: a healthy dynamic and a freedom that is a source of creativity.
The importance of maintaining organic growth
The process described is generally observed at the time of a company's creation. Once that stage has passed, the company can legitimately consider the question of financing with a view to a growth relay. While the second funding round may seem more straightforward, the question of independence remains no less relevant. For example, a fundraise can sometimes be useful for industrialising a prototype. Caution must remain the order of the day and this kind of operation should only be carried out gradually and progressively. One can imagine, for instance, that investors are brought in in a targeted way to develop specific projects, rather than opening up the company's capital to them. Founders must do everything possible to maintain control of their company. Admittedly, there are sectors where this is far more complicated — the MedTech sector comes to mind, where investments are colossal. But a company must strive to grow organically. This is the healthiest configuration, as it allows the leader to maintain flexibility in an increasingly competitive market: namely, responsiveness and a willingness to take calculated risks. Indeed, on a day-to-day basis, decision-makers must make strategic choices that can have crucial consequences for the company. And in such circumstances, having to answer to investors can slow down, complicate, or even distort the decision-making process. By bringing in investors, the entrepreneur is no longer the sole master on board.
Returning to a more ethical vision of business
The younger generation entering the labour market seems more eager than ever for values other than purely monetary ones. Let us assume that the model of the independent company can more easily meet these expectations: first, because it embodies a form of wisdom by allowing the company to develop at its own pace; second, because it prioritises long-term development over the short term. The goal for the company's founders is also to continue practising their craft for as long as possible, rather than transforming into managers or accountants. In doing so, they can seek to build a company of the patrimonial type — a true model of sustainability — and follow in the footsteps of entrepreneurs such as Stefan Kudelski or Walter Fischer, who drove the dynamism of the Swiss industrial fabric. This last dimension is fundamental: being able to maintain a local dimension in one's company by creating nearby employment. As one can see, there are so many other values beyond mere financial capital that can enrich a company — and the entrepreneur would be very wrong to deprive themselves of them.
