Not the guys from Speedinvest, anyway.
This was my favourite workshop of the first day of Startup Week, a refreshing look on how to approach the process of seeking an investment on the one hand and how to approach and interact with your prospective investor on the other.
Oliver Holle presented Speedinvest to the crowd, of which you can read more in this post on TC Europe. They say that they are still very fresh out of their entrepreneurial roles and as such “perhaps more honest than other VCs”.
They see the region as full of talent and innovation but underserved with money, with lots of gaps to be filled, which is where they aim to come in. The target locations are countries along the Danube, places that are a few hours away by car or within an hour’s flight.
What followed was a series of useful, straightforward advice to keep in mind when seeking funding, here’s an overview.
5 investor myths
1) VCs are stupid – they are not; bullshit will not get you anywhere but out the door.
2) You need a hockey stick
3) It’s all about the right pitch – good ones better than the bad ones, that much is true, but ultimately your product and/or your figures actually sell
4) Avoid dumb money – can be great if you’ve nailed everything and just need scaling resources
5) Dilution is death – don’t care about dilution, care about the terms; ie. 20% of $55 million is better than 70% of nothing
Phases of marriage
1st contact – be fast and to the point, this is the first test. Don’t chase at all the investors at the same time, don’t always try to talk to the CEO/partner, associates are OK for starters.
1st meeting – don’t assume they have seen what you sent them, go from the start; build trust, this is of great importanc.
2nd meeting – if yuo’re only desire is to sell something, it won’t work – be honest and open. Also, know what you’re doing / want to do, you need to seem as if you know more about the thing you’re making than the guys across the table.
Follow up – continue to build relationships. Make sure you have a plan b for more investment, for if you don’t it might negatively influence your position. Last chance to clean out the closet of any skeletons.
Term sheet – should be simple and friendly, choose carefully which (if any) points you want to fight over.
‘Now forget all that’
Is how Oliver’s colleague Erik started his talk, the essence of which could be boiled down to – if you want to play in America, you need to be American.
If you plan on going to the Valley you need an incredibly good plan, network of friends and mentors. And a whole lot of energy and persistence. And the CEO is going to need to leave his girlfriend behind and move to Palo Alto.
Warm intros are essential, start courting wanted investors 12 months in advance. Also – ask for advice. The VCs will be flattered and will generally be willing to help you out. Ask for money – get advice, ask for advice – get money.
Perception of momentum, buzz and a short window of opportunity contribute to a higher probability of getting an investment. Also, prehaps a little dose of arrogance won’t hurt, unless you’re dealing with Speedinvest of course.
All in all, an awesome block with Speedinvest guys, great to have you in this region.