It was my first time pitching a VC investor.
I had settled on the sofa of my lounge, prepared for a video name with somebody I had by no means met in particular person. I had a enterprise concept and a group to drag it off. He had the cash and curiosity in early-stage startups. Fingers crossed it’s a match!
The decision was brief and to the purpose. We spoke about my concept, the group behind it, and why we would have liked the cash.
Half an hour later, a $100k funding landed in our checking account.
How did that occur?
To begin with, there has by no means been a greater time for elevating startup capital – investor exercise in Europe is larger than ever. In keeping with Crunchbase, European startups raised a document $51 billion within the first six months of 2021. It appears that evidently buyers are thirsty for European improvements and we jumped on the alternative.
And secondly – having labored as an funding analyst at a VC fund previous to pursuing my very own enterprise concept, I knew what buyers wanted to listen to to decide in my favor.
We have been in a position to tick all the containers:
A powerful group
Your group and its mixed expertise, information, and skillset are in all probability the one most vital factor for buyers. As a result of concepts are nice and all the pieces, but when the individuals behind the thought can’t get it off the bottom, it’s ineffective.
In my case, I already had a historical past of enterprise relationships with my two co-founders. Previous to launching our new startup, we had bootstrapped a worthwhile on-line retailer, grown it to $1.5 million income, and finally led it to an exit. This proved that we had a stable monitor document – not solely did we have now the expertise of constructing a profitable enterprise, we had additionally confirmed that we’re a coherent group.
The larger the spherical you’re aiming to lift, the extra vital the group and its experience develop into. That’s why it’s frequent observe even for later-stage startups elevating A, B, C rounds to rent board members whose experience corresponds to the precise funding spherical.
A reliable endorsement
I’ve all the time been an energetic member of my native startup ecosystem. Earlier than the pandemic struck, I used to be a daily attendee of native tech conferences and networking occasions. At these occasions, I’d hang around with different entrepreneurs, hearken to their experiences, and take their recommendation, in addition to share mine.
Through the years, I had constructed a robust community of individuals from the native ecosystem. So, when the time got here to search for funding for my startup, I reached out to a founder I had met in one of many many networking occasions who had fundraising know-how. He had an in depth relationship with quite a lot of buyers, so I requested whether or not he might make an intro. He agreed.
For those who ask me, private introductions are each bit as invaluable as you’ve heard. To us, an introduction and private suggestion from a profitable startup founder was the trustmark wanted to persuade the investor that we’re value their cash.
A convincing pitch
Lastly, the pitch.
In my pitch, I targeted on two issues:
- The impression – how many individuals will my resolution have an effect on?
- The cash – how does my startup plan to earn money?
In different phrases, my pitch was much less concerning the product itself, and extra concerning the investor’s return-on-investment potential.
I talked cash – how we’re planning to revenue from the $13.8 billion influencer advertising trade, how the answer will allow tens of millions of well being and health influencers to monetize their content material, and the way precisely we’ll get them registered on our platform.
Having labored in a VC fund and heard loads of founder pitches, I’ve observed that not paying sufficient consideration to the enterprise’ income and buyer acquisition fashions is a standard mistake. In my pitch, that was the important thing focus. Buyers would possibly love your concept, however they gained’t make investments if that’s all you’ve gotten.
Seconds after my name with the investor was over, I obtained a message – he was prepared to speculate.
Earlier than our name, I had already performed my homework to ensure the method of receiving the cash would go shortly and easily. I had the contract in place, able to be signed electronically. All of the investor wanted to do was fill in his firm title and put his signature on it. I had additionally ready our financial institution particulars for the cash switch, and even an electronic mail draft for such a case.
So, as quickly as I obtained the message, I wasted no time. I despatched the investor my electronic mail with all the mandatory info and the contract already signed from my aspect. Minutes later it was despatched again to me, with the investor’s signature on it.
The remaining, as they are saying, is historical past.