What do investors look for? 5 tips from seasoned European investors

Most startup founders face the challenge of fundraising at some point in their business’s lifetime. For some of them, it happens naturally and easily through a well-built network, event participation, a pitch competition, or memorable press coverage. For others, attracting investment is a more challenging endeavor, which might take many months to secure. 

There certainly are multiple resources where one can find recommendations and do’s and don’ts of fundraising. Over the years, we’ve seen that some of the most valuable insights are coming from those who are directly in charge of providing investment and have had hundreds and hundreds of meetings and attended pitches with startups. 

The takeaways below are from interviews the team has had in the last months with founders of VCs and angel investors, with very different backgrounds. Some of them invest in social impact companies, others only in female founders, and others in tech startups. So, without further ado, here are the top five pieces of advice they are giving to those in need of securing the next investment round.

A clear story

Aline Vedder is the Investment Manager at Ananda Impact Ventures, a European VC that invests in startups addressing social challenges in areas such as education, health, and ageing. Aline has a PhD in Neuroaesthetics, using her knowledge of psychology in the VC world to assess teams and founder personalities.

aline_ananda_ventures“Know your story and tell it well. Owning and sharing your story is crucial on many occasions. As a founder you talk to a multitude of different stakeholders and you are in charge to forge the external and internal perception of your company. Your level of success will boil down to your storytelling abilities. Are you able to convey your mission and vision to a wide array of audiences? Being a good story teller will drive your ability to attract talent, acquire customers and ultimately also investors.”

Social and environmental impact

Gregoire Vigroux is a French business angel who has invested in 16 Romanian and Bulgarian startups.

“When launching or investing in businesses, my number one driver is their social and environmental impact, in addition to their business potential. The three most valuable career lessons I learned are:

  • Be humble and always surround yourself with people who are smarter than you are. If you are the smartest person in the room, you are in the wrong room.
  • Be kind to people. Treat your partners, team members, suppliers, and clients nicely, fairly, and with respect. Always. Caring about people also entails giving back to people in need through CSR (Corporate Social Responsibility).
  • Company values and culture are equally important (if not more important) than revenues and business growth. The true success of our lives shall never be measured in revenue or EBITDA. The real metric for success is the social and environmental good that we make.”

Personalized communication

William Reeve is a British serial entrepreneur and investor, who is best-known for founding renowned companies like LOVEFiLM, acting as CEO of Goodlord.co and investing in high-growth companies (like Graze, Smart Pension, Secret Escapes, and Zoopla).

“I can’t offer wisdom but I can share my experience. Fundraising is never a walk in the park, let alone during a recession. Adding to the pressure is the fact that investors will be nervous about meeting new teams and closing a deal remotely. With that in mind, expect fundraising to take twice as long as you anticipate, as funders will spend more time on due diligence when it’s remote. If you can find a safe, targeted way to use physical touchpoints in your outreach, you can expect to deliver a far greater impact and a more successful result. If not, work out how to personalise your approach as much as possible.

Portfolio relevance

Thea Messel is the founder of Unconventional Ventures, a Nordic early-stage investment firm investing in underrepresented founders. Headquartered in Copenhagen, Unconventional’s fund equates to €125K from a diverse group of 60 investors – 85% of which are women – aged between 16-70, from over ten different countries.

Thea_Messel“First, look up funds that are targeting you as founders. There are numerous funds wanting to invest in women and under-represented founders (Ada Ventures, Jane VC, Borski fund in Europe, to name a few). Then, when targeting more conventional funds and funds that maybe are interested in your industry, take a look at their portfolio and ask, have they invested in diverse founders? Do they have female investment partners who are decision-makers? These are the things that increase your chances for investment. So, start there. You can then do the same for business angels.”

A change-maker mindset

Simone Brummelhuis is founder of The Next Women and current Partner and Fund Director at the Borski Fund. The Borski Fund is a €50 million Dutch investment firm focused on investing in women-led startups, from seed stage to scaleups.

Simone Brummelhuis

“We focus on companies that really want to change the industry and where we can add value with our capital and network. We are not just excited about companies changing large industries but also about niche sectors within an industry. We are also on the lookout for women-led businesses that are already market leaders and that are interested in adding a technology component. Businesses, in general, have to be open about adding a tech component. Combine two things: the street view (i.e., focus) and the end-in-mind. It is a difficult combination, much like combining a sprint and marathon, but it is the best strategy.”

If you’re looking for specific advice on landing funding remotely, check out our related article: Tips on how to land funding during the pandemic, from Europe’s VCs.

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