Discovering Start-Ups judge, Miruna Girtu of the Syndicate Room, has compiled a guide to assist start-ups through the seemingly opaque journey of early stage funding. In this blog, she provides some background to the report.
As founders, you're building the future. The ideas deemed crazy today paired with your focus and your team’s quality of execution might become the reality in which we all operate in a few years’ time.
Whilst clearly not the end goal, raising capital can power your growth and help you reach the next level.
Traditionally, fundraising was seen as a complex, opaque process with a limited variety of options and an imbalance of power. More recently, the number of fundraising routes has increased and the whole process has become more transparent, with business angels and prominent VCs becoming more open in sharing their views and knowledge to help startups progress. A lot of the investors I know are genuinely passionate about startups, well beyond returns. However, navigating the fundraising process is still one of the biggest challenges faced by founders.
My role places me in a fortunate position with a view of both sides of the narrative. On one hand, I source and review investment opportunities, and on the other, work closely with a wide range of investors – business angels, family offices, VCs and corporates – across Europe. Thus, inspired by my conversations with them, I’ve put together this collection of questions for founders to consider before approaching investors.
First of all, consider answering them yourself, prior to and outside of the formal investor meeting setting. Think clearly and critically about where you are at this moment in time and what you lack to get to where you want. The answers could bring you a plus of awareness, structure and, perhaps, reveal some blind spots.
If you’re raising funds in the near future, you can quickly go through the list and practise articulating answers to the questions you find most relevant. Alternatively, if you’re just starting to build a company, use the information that follows to put things in perspective.
Before approaching investors, it’s good practice to do your research and understand that specific investor’s investment thesis. There is wide variation across and within types of investors. This is not to say that you need to (or indeed, can) mould your startup to fit every investor’s preference – far from it. It’s much better to be authentic. However, being empathic and aware of what each investor might focus on can help shape your pitch. Despite the time-consuming nature of it (and all the other pain points), try to embrace fundraising as an opportunity to fuel your growth and partner with the right investors; investor–founder fit is powerful (and it includes softer compatibility elements like temperament and style). Don’t take rejection personally and aim to learn from feedback, with the note that there’s generally a lot of advice available but ultimately, you have to decide what works best for you.
DISCLAIMER. Understandably, when conducting due diligence, there will always be variation – in priorities and beyond – across sectors, stages and business models.
The questions which follow are not meant to be exhaustive or touch upon the specifics of certain markets and business models. Instead, they are rather general and, while tending to keep a level of relevance across the spectrum, they are best suited for innovative early-stage technology (or technology-enabled) companies that are looking to grow fast (i.e. startups).
It’s also worth noting that approaching professional investors for the purpose of raising an equity round is not the most appropriate route for all companies. Same goes, more specifically, for raising VC funding. Not being a good fit for VC funding is in no way a reflection on the quality of a company.
I hope you'll enjoy reading The Art of Fundraising.