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How to get a VC to swipe right on your startup | Insights from Andrés Dancausa, TheVentureCity

As we find ourselves in times of global economic uncertainty, the startup hustle just got that bit more challenging. As investors right across the world tighten their pursestrings, we see tech companies make layoffs, and the startup ecosystem gets hit with some turbulence, getting your startup noticed is more challenging than before. 

VC’s hit with economic woes, are now becoming more selective, more likely to swipe left rather than right on startups, and are looking for broad concepts like ‘clear path to profitability’ and ‘realistic valuations’ in their ideal startup profile. This leaves startups asking themselves, just what can they do to be picked up? The challenge for the founder is to get noticed – by the right investor at the right time. 

We chatted with Andrés Dancausa, Fund Partner for EMEA at TheVentureCity to learn more.

Build relationships early

“Even if you’re not planning to fundraise until later in the year, now is the time to approach and interact with investors. Plant seeds early, and build relationships with investors long before you need their money. 

Offer potential investors insights into your cap table – this tells a lot about the direction your company is headed. More than showing them their potential slice of the pie, it offers clues as to how invested founders are in their own companies and even how likely a startup is to attract the talent needed to sustain its growth (for example, by offering appealing stock options).

At TheVentureCity, we don’t just look for growth-minded founders, but also for people that we can trust. The earlier you start establishing a personal connection with your would-be investors, the better your chances of earning their financial support down the line. To achieve this, think less about what you need from them, and more about what you can bring to the table.

What expert knowledge of yours might be valuable to them? Each time you reach out to potential investors, make sure you’re offering something that’s beneficial to them. For example, send monthly updates with exclusive data-backed insights related to your field. 

Most importantly, be patient. Building strong relationships with investors takes time, especially in today’s competitive landscape. But keep yourself firmly on their radar, and in time you’ll see the fruits of your labour.”

Focus on sustainable growth

“Once you get hold of fresh funds, you’ll need an airtight plan to ensure that they drive maximum growth. But founders must take into account that growth can bring about a new set of challenges that earlier-stage startups tend not to face, such as increased overhead costs and greater complexity when it comes to day-to-day logistics. 

Make sure that you’re allocating the funds where they can create the most value. For example, there might be certain KPIs you need to hit before you can raise your next round. If this is the case, focus your resources on reaching them. In the short term, it’s better to cut back on lower-priority tasks and go all in on your core objectives. A common mistake many early-stage founders make is spreading themselves too thin.

Now is a good time to pay extra attention to your hiring plan. For example, make revisions every month rather than quarterly. Also, depending on your size, look into the potential option of inorganic growth, namely mergers and acquisitions. There could be opportunities arising in the coming years, but you will need to move fast. Those who have laid the groundwork by building relationships in their sector will be in a better position to make a smart and timely decision.” 

Turn challenge into opportunity

“Experts have warned of the possibility of a global recession in 2023. But founders with the right mindset can use a recession to create new opportunities for growth. For example, with many larger corporations freezing hiring (and even downsizing), talent pools may be brimming with candidates for traditionally hard-to-fill roles. Once again, startups should use this time to review their hiring strategy and analyze attrition rates.

More than ever, you’ll need to have highly detailed insights into the status of your competitors. The landscape of your sector may change considerably in 2023. Build up a list of companies that could represent opportunities for mergers or acquisitions. But equally, keep an eye on those that are struggling to weather the current economic climate – and make careful note of what got them into this position.

Finally, it’s essential to have a plan B. Investigate other financial instruments such as venture debt, revenue financing companies and grants among others. When capital doesn’t flow, you need to gain as much negotiating power as you can. 

Those who demonstrate strong leadership, and use this time to prepare will stand the best chance of building robust, recession-proof companies which are built to last.” 

Patricia Allen
Patricia Allen
is the Head of Content at EU-Startups. With a background in politics, Patricia has a real passion for how shared ideas across communities and cultures can bring new initiatives and innovations for the future. She spends her time bringing you the latest news and updates of startups across Europe, and curating our social media.
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