How to seduce VC funds for your startup
I talked to more than 50 global Venture Capital companies in 2020. The purpose of these interviews was to meet the VCs who finally invested…
I talked to more than 50 global Venture Capital companies in 2020. The purpose of these interviews was to meet the VCs who finally invested in the Series A of Tiko. Although I have known some VCs for a long time, it has been very useful to understand better their investment criteria in the new normal after coronavirus. Here is what I learned from these talks:
# 1 You have an opportunity now
Around half of the VCs I talked to had raised a new fund and couldn’t deposit it due to Covid. Actually, I met a fund that raised €300 M and made a single investment so far. The largest fund I interviewed was managing $41 billion, the smallest €250 M. What they all had in common was that they were looking for startups that were good at digital; the startups that usually “survive”. In 2020 “growth” was the key word — this might have changed in 2022 in “profitable growth”.
# 2 Don’t lose the momentum
It is necessary to meet with a VC a maximum of two times and then invite him to the data room. The longer the initial acquaintance process takes, the more harmful it can be. Let’s say it can be a loss of “momentum”. Companies meeting VCs for the first time tend to prolong this process out of respect for VCs. It’s more efficient to do it the other way.
# 3 Pitch Deck before meetings is better
Usually, the startup sends an investor presentation to the VC. For the first time, on this tour there were VCs who sent me their pitch deck before the first meeting. They do this to differentiate and I like it. What better way to recap the two-minute introduction of the VC that happens at the beginning of a video call?
# 4 Use digital platforms
We are used to sharing the presentations with VCs as an attachment to an email. I recommend using Docsend and similar sharing platforms instead, as they allow you to increase productivity, to monitor who is reading and to keep the presentation up to date.
VC and start-up matching platforms (aka Financing Tinder), have also come as a new trend (e.g. Foundernest, Gust…). After creating a profile as a startup, you swipe right or left to say if you are interested or not in a VC. If both parties match, you are introduced. This way, it isn’t necessary to say: “I have done a lot of these things, I don’t need them”. A friend is a co-founder of one of these sites, so I tried it. I was paired with 26 VCs. I matched with 4 and interviewed them. One made it to the final stage. It was a very productive process for me. I recommend it especially for those who are in the seed stage.
# 5 Commit to the sustainability of the company
VCs require the companies they invest in to care about their social impact, especially about climate change. Right now, big VCs stay away from investing in startups that don’t reset their carbon dioxide footprint, for example. If you are wondering what entrepreneurs are doing about this issue, have a look at the Leaders for Climate Action site and what they are doing: it is a platform where thousands of entrepreneurs act together, Tiko among them.
Choosing the right investor is an important decision. I hope these insights are useful to all entrepreneurs looking for investment.