Disruptor or incumbent – what’s the easiest way to raise money?

Coworking space at Selina Medellin
Coworking space at Selina Medellin. (Selina)

Disruptive startups across all sectors have found it fairly easy to raise money but there is still opportunities for more established businesses.

Speaking on a panel discussion at Adjacent Spaces @ IHIF 2021 in Berlin, Zachary Schwartz, CEO at aparthotel and serviced apartment operator YAYS, said if you have a niche and are executing correctly you can make and raise money.

“From a capital standpoint, there’s been so much discussed about being a disruptor, I just think that’s a very thin slice of the overall pie and there’s good ways to make money through just more traditional approaches so long as you have a competitive advantage, you have a niche and you’re innovating so I don’t think that you need to be a disruptor to make a return and I think a lot of capital out there realises it, so there’re looking for groups that are doing things better than their competitors,” Schwartz said.

Christian Gaiser, CEO at Numa Group, said it was important for businesses to focus on the long term, and focus on what they can control.

Saurabh Chawla, CEO, PropCo Selina, said one of the big differences was what figure you could use to raise money. For an established business capital comes in as a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization) but as a start-up insurgent it can be as a multiple of revenue, he suggested.

“Smaller hotel chains, loss making, have been valued at a lot more than traditional hotel players and this is where the difference in capital comes in,” he said.