- Posted by Myrto Papathanou
- On November 6, 2018
There are many reasons why we choose to invest in some companies, which reflect our way of thinking and expectations. Below are some must-haves which will help you secure funding from us:
1. Committed and Determined Founders
It’s not uncommon for us to get submissions for early stage funding from teams that don’t have a strong commitment to the project. This could be because the project submitted is part of an established company or a research institution, the founders are (and will continue to be) employed somewhere else, the founders are academics not interested in leaving their role or focusing on the specific project, the members have existing commitments (university, military, work contracts) they cannot get out of, and similar reasons. We are finding it very hard to commit to such teams.
Tip: When funding you, we commit long term to financing your team and company in order for you to execute on the business plan proposed. We are making a serious financial and time commitment to you and you are in turn expected to make a serious long term commitment to us by devoting 100% of your business time to making your plan a (successful) reality. When presenting the team, it is important to make sure all founders are aligned and committed to the company.
2. Technology and Sector are Relevant
This is a genuine “it’s not you, it’s me” case. Every fund has different areas of interest and out of focus tech and sectors – although we are by and large sector agnostic, we have some preferences and this mainly relates to the value we can add. For example, we prefer technology solutions that have a B2B business model (although we have done B2C investments) and are focusing on enterprise. The areas with which we are more comfortable investing also relate to the partners background and network. We like enterprise software, networks, telecoms, infrastructure, energy and maritime because the team has the know how to assist the entrepreneur. In all cases, the technology needs to be at the right stage of the hype curve,
Tip: Make sure you research our fund’s previous investments, corporate partnerships and industry involvement to see how close they are to your ideal customers, suppliers and partners. Demonstrate that your team has the technology depth and sector expertise and is backed up (on an advisory,partnership and other investor investor level) by people in your field. Focus your proposal on the product differentiation and avoid buzzwords!
3. Market Validation has started
Even for companies at a very early stage, we are interested in seeing some market validation in terms of traction or initial customer interest. This for us indicates that the company has moved from the concept stage and is on the ground, gathering important market feedback and readjusting their assumptions. After all, entrepreneurship and business is about execution, and therefore we need to see some evidence about the value you are creating rather than assumptions or subjective opinions.
Tip: Even with low or no budget, it is possible to create some initial traction if you have a product or service that actually solves problems and is needed in the market. It is how all grassroots initiatives, from business to non profit, get started. Try to get a product out in the market even if it is imperfect, even if the MVP is the only thing present and even if you cannot afford to strongly market it. Initial adopters, or initial B2B clients, will give you a sense of traction and valuable feedback to move ahead. The further you are in your market validation, the more real data you have and the better your readiness to receive funding.
4. Market and Related Revenue is Sufficient
VC funds like ours are making high-risk investments, since the companies are at a very early stage, and expect to make high returns in the case of a success. To achieve that, the market you are addressing should be large enough to justify a high valuation at exit and this usually happens when the market is international. Suggesting that the market you are targeting is for example € 60m in revenues is too small. Likewise, your revenue estimates need to be reasonable for an investment to make sense and for the numbers to add up. On the flip side, we sometimes get funding proposals that are claiming an entire field is their market with no specific focus, while they are being extremely optimistic for the revenue projections. Equally, numbers that do not make sense and are orders of magnitude larger than common sense suggests, will tend to make us skeptical.
Tip: In terms of size of the market you are addressing, try to see if this is large enough for a VC investor and make sure this sizing refers to the area you are focusing on. Try to make realistic but ambitious projections (its tough, we know) and try to imagine what your company would look like on exit and what value this could have to both you and the investor. The market and your position need to be large enough for someone to pay a premium to acquire you as opposed to building the business themselves.
5. The Investment Stage is Right
If you have already received significant funding through equity financing and have advanced your business, the stage is probably too late for us as we only do Pre Seed (proposal submission deadline are three times a year) and Seed (open for submission all year round) investments. This relates to our role and ownership in your company, both of which we want to be significant for our investments. Also, the further ahead you are, the less valuable our operations are likely to be and hence the lower the appeal of the investment.
Tip: There are later stage funds across Europe that are looking to fund at and post Series A. If your metrics are there, you should be looking at ways of attracting their attention.
6. Making an effort from Day 1
It is painful for us to look at great ideas with interesting people submitting poor investment proposals. When fundraising at the early stages of creating a company, entrepreneurs have to answer many and varied questions from prospective investors. If a submission is lacking some of the things we want to see, it is indicative of the effort put in by the person submitting. In turn this is indicative of how the team will be operating in the future and collaborating with us, so we would expect it to be flawless. We review between 1.500-2.000 submissions a year to make 8-10 investments so yours need to stand out.
Tip: Read and answer all questions with diligence – putting in the time and effort to submit a strong proposal projects professionalism and resolve and greatly improves your chances of funding. Make sure you are communicating your key value proposition at all times and differentiating where necessary!
7. Putting Greece in the equation
We receive quite a few international business proposals, which we gladly review, respecting our clear mandate to invest in Greek related companies. And there are plenty of benefits for founders outside Europe to establishing their HQ or technology branches in Greece. Most importantly the workforce consists of a highly educated, english speaking population and unparalleled value for money engineering resources – indicatively, several technology leaders such as Tesla, Samsung, Citrix have or are setting up R&D centres in Greece. There is also a vibrant local ecosystem with accelerators, incubators, funds and corporates that will support early stage start ups and a strong connectivity and market relevance of the country to European, Middle Eastern and North African market. Finally, Greece is on the forefront in terms of development in some sectors ripe for technological disruption, such as maritime, tourism, energy, transport and real estate and start ups operating in those can have easy access for market partnerships, commercial validation and supplier services.
Tip: You also get an average of 300 Days of Sunshine a year!
Submit your company now here for Pre Seed and Seed Investments.