In late November, a landmark business event took place in the conference hall of the Olympic National Sports Complex in Kyiv: Invest Forum. The event was attended by almost 2 000 people who were able to communicate directly with well-known venture capital investors and learn about trends in the modern start-up community. I participated in a discussion panel titled Startups vs Funds – A Look at Investing. Perhaps it might be more correct for me to describe myself as the moderator of this discussion, rather than as a direct participant, as the other two speakers were much more experienced in matters of venture investment. The panel contained the founder and managing partner of the TA Ventures venture fund, Victoria Tihipko, and Stefan Horvas – partner of Burdjfinacial. Together, we were looking for answers to the following questions: what might a start-up investor be interested in, and what common mistakes should be avoided so as not to be turned down when looking for financing. Here I happily share the answers.
An extremely important, though maybe not the most obvious factor: you need to work “long-term” with investors. That is, to establish communication with them even before you start thinking of applying for funding. Venture capital funds can receive dozens or even hundreds of emails and calls every day proposing investments for one idea or another, and your proposal runs the risk of simply being lost in this stream. As such, it is much more effective to first establish primary communication with a potential investor, and then present the idea to them. To do this, you can use any available means: social networks, communication on the margins of various events and forums, impromptu meetings, and so on. After the investor focuses on you, it will be much easier for you to get their focus on the benefits of your product or idea. This is why using cold-calls or looking for an intermediary in communicating with an investor is maybe the simplest approach, it is also extremely ineffective. But as soon as you manage to establish primary communication with the investor, another question will surely arise: how not to fail at the most important stage in the search for funding – during the interview.
Here the old truth about brevity works, and, as we know, brevity is the sister of talent. How this wisdom is embodied in practice can be seen in the example of a Ukrainian startup for the production of bio-fuel – BioTech, with whom I happened to cooperate. In 2013, the company wanted to enter the UK market and for this it needed legal support and investment. After an unsuccessful search over six months for investors, it turned out that 80% of the presentation BioTech sent to various potential investors was devoted to a story about types of cows! And only 20% was an actual presentation of the BioTech business model and its competitive advantages, and even then only at the very end! Of course, with such an approach, this startup made it very difficult to find funding for itself.
The presentation of the product should be as informative as possible, but at the same time simple and short. It is important to remember that the foundation of a presentation should focus on two things: first, the actual idea, and second, the ability of the team (noting their experience, qualifications, and so on) to bring it to life. Therefore, one of the slides (and ideally there should be no more than 10-12) should definitely be devoted to stories about key members of the project team. In addition, you need to clearly convey to the investor the problem the product solves for potential consumers, the markets you expect to work in, your competitive advantage, and the monetisation model of your idea. All of this needs to be conveyed in just a few minutes of the interview! Therefore, the simpler and more informative the presentation, the better the chances for success.
And one more very important point: before going to an investor: the startup team must clearly define the required model and amount of funding. After all, the investor assumes fairly high risks (the most easily identified of which is the squandering of capital) and if you fail to convey to him how you plan to use the money, then perhaps you will not have the chance to get it.
The time of difficult and challenging searches for an investor to implement a good idea is behind us. In the modern global world, hundreds of different conferences are held every year. At these events, your startup can be appreciated or get a second wind. I have no doubt that various Ukrainian and foreign entrepreneurs have already taken advantage of one of these opportunities arising from participating in the recent Kyiv Invest Forum.