Prepare yourself for futute investment rounds

Prepare yourself for future investment rounds. Hear from Three VC Firms! 🚀

Securing an investment can be an essential milestone. Especially one that can take ages and needs a lot of effort in finding the right match. What are the ‘preventable mistakes’ and best practices that could speed up the process? We got the opportunity to ask everything we wanted to VC firms 280ppm/Hal investments, FORWARD.one and SHIFT investments.

Disclaimer: this is just one perspective on investments, especially from VC firms, so take this into account when applying insights.

Pro tip: do not only ask for references at CEO’s that have signed with a certain VC, but see if you can find references that (eventually) did not sign, and make sure you know their experiences as well. For those of you who were unable to join, catch a (staccato) glimpse of the valuable answers we received.

• Investment inquiries: what % leads to actual investments and how important is a warm introduction.
  • 1-2% lead to actual investments
  • Warm introductions help a lot
  • 50% of the inquiries do not fit the proposition (so make sure you reach out to the right VC)

• Inconveniences in the process: what do VCs discover in later stages that could be problematic.
  • Weaknesses in the IP (strategy)  / Can you go around the current IP strategy (happens more often than you think)
  • Too positive financial forecasts
  • Too complex financial models
  • Beware of the impact of unfavourable commercial contracts on your venture.
• Exit strategies: how important is this in your pitch deck?
  • Provide desk research / Map the landscape / interested parties.
  • Make it part of your proposal but don’t focus to much on it
• Financial models: what are absolute dealbreakers in financial models and forecasts.
  • Keep it simple & explain your assumptions and provide your data sources.
  • Less focus on outcomes: more on drivers
• Value proposition: what is considered a vague proposition and which good examples are there out here.
  • Still very often vague statements on websites and pitch decks
  • Do one thing really well (instead of a lot a little)
    • Bad Example: Protein company wanted to reach all markets, all countries. Had a good product and excellent marketing but didn’t succeed because of lack of focus.
    • Good Example good proposition: Sensorfact
• Governance: how do VC’s look at big founder teams (+4) or solo founders without a team but with strong partners?
  • Many founders (+4)
    • not a dealbreaker perse: however, get a clear division between the founders (beforehand)
    • Make sure that there is a clear point of contact.
    • More founders increase the chances of the VC not being aligned with one of them.
  • Solo founder
    • No team yet: smart use of partners.
    • Not a dealbreaker perse but prefer not to invest in a company with only founders because the team plays such an important role in the scaling.
    • In any case have a clear plan on how you will create the team, as it is not so simple as to ‘just hire’.
• Pitch decks
  • No ‘onions’ in the pitch deck (visual with the complete market in circles)
    • Use verticals (e.g. x many units sold in that market actual numbers
  • Too much technology in the slides. More often than you think actual market value is not spent enough time on.
• Corporate VCs versus VCs: Pros and Con’s
  • Pro: Market Entry, Co-developing, making use of resources
  • Con: ‘Corporate Chokehold’, push in a certain way.
• Customer investing
  • Very hesitative about it: often gets too dominant and it is also risky to rely on one client
• Team
  • Young team: fine but make sure you also include seniority as investors will want to see that.
  • Scaling.
    • make a detailed plan: its not so easy to hire so make sure you already have clear profiles and a recruitment strategy on how to get that.
    • Also pay attention to other scaling focus points: e.g. How will you create a service organisation that your customers will require.
• Red Flags
  • Scattered cap table.
    • Extra red flag different entities such as different cultures or mix government.
  • Corporate VC having a material say.
  • Very dominant investor
    • Veto rights etc.
• Final advice
  • Start early: the whole process takes a lot more time than you think.
  • Ask your VC to provide you with references as well, eg other CEOs to hear about their experience what that specific VC.
  • Try to have multiple options.
  • Be investor ready : Preferably having good customers

We organized this investment workshop in collaboration with TU Delft Campus and Justus Hollander from 280ppm/Hal investments, Viktor Tsjebanov from FORWARD.one and Bart Budde from SHIFT investments. Please reach out to us if you would like further contact with them.

📸by Bart Heemskerk – Upstream festival