Angels, VCs, Families and Crowds: The Truth Behind Startup Investment
The Truth Behind Startup Investment
Last night the One Roof event space was jam packed with a room full of people eager to talk about the process of raising capital for their startups. The event was a collaboration between Luna and Startup Vic hosting the largest panel we have ever seen on our stage! Nine individuals including both founders and investors across a range of different investment vehicles and platforms were there to share their stories, experiences and learnings about a process that is, for most people, incredibly daunting!
We heard from Alan Crabbe, Cofounder of Pozible and Jonothan Byrt, Founder of Memobottle on the process of implementing successful equity crowdfunding campaigns. We learnt that the time of year to run a campaign is important (don’t do it in December and give yourself sufficient time to prepare for it) and that crowdfunding works best for consumable based products and businesses.
Heidi Holmes, Cofounder of mentoring software platform Mentorloop and Paul Naphtali, cofounder of VC fund Rampersand spoke about the process of approaching venture capitalists. Straight off the bat Heidi mentioned a really valuable point that many founders forget because they can become so desperate to raise capital:
You want to connect with your potential investors on a personal level and be able to go out and have a beer with them.
One Roof member and one of my favourite humans and mentors Alison Hardacre, Cofounder of Healthkit and Matt Allen, Partner at Startmate and an Angel Investor shared their insights on raising capital from angels. Alison was able to raise very quickly through angel investment. The healthcare industry is very complex and she realised very early on that not all investors are willing to dive into high risk industries and businesses. She has been able to secure investment from investors who are incredibly supportive but also give her a lot of freedom to build the business as her and he cofounder see fit.
As Founder and CEO of One Roof, myself and Campbell Andrews, an Investment Manager, at a Family Office spoke about the process of approaching high net worth individuals and family offices. I knew that because co-working is considered more of a real estate play than a high growth tech company and because we have a strong impact vision, I wanted to go straight to investors who would really understand, align and resonate with the mission underpinning One Roof.
It was a really rich, well rounded and practical conversation about what it takes for founders to raise and what investors are looking for. I have tried to capture some of the key point below!
Define the problem as clear as day
Matt reminded the audience multiple times that the most important point to get across to any investor is the problem you are trying to solve. Don’t worry too much about documents, presentations, pitch decks (in fact Paul mentioned that your pitch deck should really be no more than about 5 slides). Investors are interested in YOU and the PROBLEM. Investors don’t know everything, in fact, they often don’t know much about your product, service or industry so define the problem incredibly clearly for them.
Ask for advice, build rapport & nurture relationships
We discussed the importance of building rapport and nurturing relationships. Many of us founders went to potential investors in the early days to ask for advice “what do we need to do in order to be investible?” Over time we nurtured those relationships, updated and checked in with potential investors on a regular basis to ensure we were always top of mind and they were aware of our successes and wins. For Mentorloop Heidi explained it took two years for Rampersand to invest in them but it was worth the wait and the effort.
Don’t pretend everything is going right all the time
Investors know things don’t go right all the time for founders, in fact, most of the time things never go right. As Paul puts it:
There are only two things we know when you pitch to us for the first time, your product is the worst it will ever be and your projections are wrong.
Don’t pretend to investors that everything Is going right all the time. Be honest, be clear and bring them into the process. They want to see your resilience and they want to know you have experienced a problem and thought through the solution. They want you to be authentic and honest and ask them for advice.
Preparation is key
Throughout the entire process of raising capital, I ensured that prior to every meeting and every touch point, I had taken the time to prepare. I had asked lots of people for advice including investors, other founders, experts and a business mentor. I role played meetings, I practice and prepared questions. I thought about everything I could possibly be asked. I came prepared with both high level and in-depth financials. Of course, I was asked questions I hadn’t thought of and thrown curve balls but at least I went into meetings feeling (somewhat) confident and prepared. Every single conversation, meeting, email chain is as important as the next. You need to maintain momentum, excite your potential investors and keep them constantly engaged.
Final thoughts for what it’s worth
Finally, I would say as you are thinking about your cap raise ensure you are reaching out to, and surrounding yourselves with, the right network of people who can offer you experience, advice and mentorship. Working at a co-working space like One Roof means you will constantly be surrounded by founders who have been through the process or who are going through the process at the same time as you. Through our Business Hub we will also ensure we connect you to the right investors, mentors and advisors to support you in your process. We are here to fast track the journey for you and to foster the right professional network for you.
If you are interested in becoming a member or accessing our Business Hub, you can start by signing up for a one week free trial. This a great opportunity to check out the space, work from One Roof, meet the community and understand more about how we can support you and your business to success. Sign up here. We look forward to meeting you if we haven’t already and to supporting you and your business!
Written by: Sheree Rubinstein, Founder and CEO of One Roof