We asked Greg from hub:raum Kraków to write few simple tips for startups that are in search of Investors. Hope you'll like it!
There are probably many guides which tell you how to talk to potential investors. However, it seems that there is never enough of them as the same mistakes are often repeated by huge number of startups. Some summary from my experience you can find below:
• Always know who are you talking to
For many statuppers investor group is homogenous. But that is a mistake. You get different approaches. Some are looking for big return on equity deal, other might have more diverse goals.
Financial Investors like seed or venture funds are usually pursuing investments for high IRR (return for their investors) with perspective of 3-5 and maximum of 7 years. Usually they are looking for more mature products or at least with MVP.
Accelerators will be more flexible and are typically looking for an exit with some of the follow up rounds. They accept usually earlier stage projects, even without proper go2market approach or business models. Actually, they might even help you to develop them!
Business angels – they might be pursuing their own strategy, check what they were up to lately to know what you might expect. They might be looking for something to match
Corporate funds – this group is a bit different. Usually they are pursuing some general strategy like expanding the product portfolio of subsidiary companies. However, in rare cases they could also be entrusted with investments of free cash flow from other operations, but it is a rare case.
• Prepare yourself
As mentioned above potential investors vary a great deal. Therefore they will have different expectations about what you will present. Whether it is a business plan, an excel spreadsheet, deck, user case study. I realize it would be really great to have one fit-for-all package but you have to make at least some effort to match the potential investors
expectations. And that doesn’t mean just putting their name on the first page of the deck!
• Portfolio
Check what is already there in investors’ portfolios. See if your project competes directly or indirectly with any of the current investments as this may be a show stopper. Be prepared to
answer questions about this. Or maybe it is supplementary? Or could be somehow bundled with products of their other investments? Showing this as a case study could help you a lot in sealing the deal.
• Go for smart money
You can get funds or so called mentorship from lots of places. But check what else you can get from investors. Maybe they can help you to set a pilot of your product somewhere? Or
can provide you with some technical expertise, market research opportunities or support the sourcing of equipment?
• Look who is on the other side of the table
It is obvious that the potential investor will be assessing you. But you should also do the
same. Remember it will be someone who you will be talking to a lot in the future. If you already see there is no way you can work with that person on the long term basis – just save
both sides the trouble. If you feel that your personalities will clash at every occasion or your vision of execution differ too much it will never work.
Who is that bee that wrote that article:
Greg Banas is head of investments at hub:raum for CEE - Deutsche Telekom unit for Central and Eastern Europe. He started his career by working for Polish Embassy where he has been supporting polish companies doing business in Portugal and along the way he picked up some surfing skills and some Portuguese. After that he moved to pursue his career in business advisory, due diligence and audit activities at EY what gave him insight into the world of big corporations. For the last couple of years he was strongly engaged in the startup community managing investments for a Venture Capital group, running his own startup advisory company and getting personally involved in a couple of startups. He is also pursuing
his Ph.D. as a researcher in the area of innovations and investments at Cracow University of Economics.
If you want to contact hub:raum, write at hello@hubraum.com.
We also encourage you to apply to hub:raum startup programme. More details here: applytohubraum.com
There are probably many guides which tell you how to talk to potential investors. However, it seems that there is never enough of them as the same mistakes are often repeated by huge number of startups. Some summary from my experience you can find below:
• Always know who are you talking to
For many statuppers investor group is homogenous. But that is a mistake. You get different approaches. Some are looking for big return on equity deal, other might have more diverse goals.
Financial Investors like seed or venture funds are usually pursuing investments for high IRR (return for their investors) with perspective of 3-5 and maximum of 7 years. Usually they are looking for more mature products or at least with MVP.
Accelerators will be more flexible and are typically looking for an exit with some of the follow up rounds. They accept usually earlier stage projects, even without proper go2market approach or business models. Actually, they might even help you to develop them!
Business angels – they might be pursuing their own strategy, check what they were up to lately to know what you might expect. They might be looking for something to match
Corporate funds – this group is a bit different. Usually they are pursuing some general strategy like expanding the product portfolio of subsidiary companies. However, in rare cases they could also be entrusted with investments of free cash flow from other operations, but it is a rare case.
• Prepare yourself
As mentioned above potential investors vary a great deal. Therefore they will have different expectations about what you will present. Whether it is a business plan, an excel spreadsheet, deck, user case study. I realize it would be really great to have one fit-for-all package but you have to make at least some effort to match the potential investors
expectations. And that doesn’t mean just putting their name on the first page of the deck!
• Portfolio
Check what is already there in investors’ portfolios. See if your project competes directly or indirectly with any of the current investments as this may be a show stopper. Be prepared to
answer questions about this. Or maybe it is supplementary? Or could be somehow bundled with products of their other investments? Showing this as a case study could help you a lot in sealing the deal.
• Go for smart money
You can get funds or so called mentorship from lots of places. But check what else you can get from investors. Maybe they can help you to set a pilot of your product somewhere? Or
can provide you with some technical expertise, market research opportunities or support the sourcing of equipment?
• Look who is on the other side of the table
It is obvious that the potential investor will be assessing you. But you should also do the
same. Remember it will be someone who you will be talking to a lot in the future. If you already see there is no way you can work with that person on the long term basis – just save
both sides the trouble. If you feel that your personalities will clash at every occasion or your vision of execution differ too much it will never work.
Who is that bee that wrote that article:
Greg Banas is head of investments at hub:raum for CEE - Deutsche Telekom unit for Central and Eastern Europe. He started his career by working for Polish Embassy where he has been supporting polish companies doing business in Portugal and along the way he picked up some surfing skills and some Portuguese. After that he moved to pursue his career in business advisory, due diligence and audit activities at EY what gave him insight into the world of big corporations. For the last couple of years he was strongly engaged in the startup community managing investments for a Venture Capital group, running his own startup advisory company and getting personally involved in a couple of startups. He is also pursuing
his Ph.D. as a researcher in the area of innovations and investments at Cracow University of Economics.
If you want to contact hub:raum, write at hello@hubraum.com.
We also encourage you to apply to hub:raum startup programme. More details here: applytohubraum.com
