It was my first time pitching a VC investor.
I had settled on the couch of my living room, ready for a video call with someone I had never met in person. I had a business idea and a team to pull it off. He had the money and interest in early-stage startups. Fingers crossed it’s a match!
The call was short and to the point. We spoke about my idea, the team behind it, and why we needed the money.
Half an hour later, a $100k investment landed in our bank account.
How did that happen?
First of all, there has never been a better time for raising startup capital – investor activity in Europe is higher than ever. According to Crunchbase, European startups raised a record $51 billion in the first six months of 2021. It seems that investors are thirsty for European innovations and we jumped at the opportunity.
And secondly – having worked as an investment analyst at a VC fund prior to pursuing my own business idea, I knew what investors needed to hear to make a decision in my favor.
We were able to tick all of the boxes:
A strong team
Your team and its combined experience, knowledge, and skillset are probably the single most important thing for investors. Because ideas are great and everything, but if the people behind the idea can’t get it off the ground, it’s useless.
In my case, I already had a history of business relationships with my two co-founders. Prior to launching our new startup, we had bootstrapped a profitable online store, grown it to $1.5 million revenue, and eventually led it to an exit. This proved that we had a solid track record – not only did we have the experience of building a successful business, we had also proven that we’re a coherent team.
The bigger the round you’re aiming to raise, the more important the team and its expertise become. That’s why it’s common practice even for later-stage startups raising A, B, C rounds to hire board members whose expertise corresponds to the specific funding round.
A trustworthy endorsement
I’ve always been an active member of my local startup ecosystem. Before the pandemic struck, I was a regular attendee of local tech conferences and networking events. At these events, I’d hang out with other entrepreneurs, listen to their experiences, and take their advice, as well as share mine.
Over the years, I had built a strong network of people from the local ecosystem. So, when the time came to look for investment for my startup, I reached out to a founder I had met in one of the many networking events who had fundraising know-how. He had a close relationship with a number of investors, so I asked whether he could make an intro. He agreed.
If you ask me, personal introductions are every bit as valuable as you’ve heard. To us, an introduction and personal recommendation from a successful startup founder was the trustmark needed to convince the investor that we’re worth their money.
A convincing pitch
Finally, the pitch.
In my pitch, I focused on two things:
- The impact – how many people will my solution affect?
- The money – how does my startup plan to make money?
In other words, my pitch was less about the product itself, and more about the investor’s return-on-investment potential.
I talked money – how we’re planning to profit from the $13.8 billion influencer marketing industry, how the solution will enable millions of health and fitness influencers to monetize their content, and how exactly we’ll get them registered on our platform.
Having worked in a VC fund and heard a lot of founder pitches, I’ve noticed that not paying enough attention to the business’ revenue and customer acquisition models is a common mistake. In my pitch, that was the key focus. Investors might love your idea, but they won’t invest if that’s all you have.
Seconds after my call with the investor was over, I received a message – he was ready to invest.
Before our call, I had already done my homework to make sure the process of receiving the money would go quickly and smoothly. I had the contract in place, ready to be signed electronically. All the investor needed to do was fill in his company name and put his signature on it. I had also prepared our bank details for the money transfer, and even an email draft for such a case.
So, as soon as I received the message, I wasted no time. I sent the investor my email with all the necessary information and the contract already signed from my side. Minutes later it was sent back to me, with the investor’s signature on it.
The rest, as they say, is history.