Tip 1: Preparation of the investor search
When startups start looking for investors, preparation is half the battle. If one pisses in front of investors at an event, the presentation should shortly focus on those questions that interest investors the most. This can vary a bit depending on the startup or sector, but in principle: Is there a market? What makes the startup different or better than others? Is the model scalable? If you get to know potential investors at networking events, ideally the pitch will be even shorter and more precise – the goal is to be remembered for another possible meeting (see below). Part of the preparation is to think carefully about which investors are even suitable.
Tip 2: Ask for existing investments
It is very important that an investor fits in well with the startup – not just in terms of content, but also personally. After all, it’s not just about money, it’s about support and the network in which you live. “An investment is partly like a marriage contract,” says zoomsquare co-founder Christoph Richter. Not infrequently, investors are interfering in the fortunes of the start-up to ensure that their investment one day makes a rich return. The best way to find out what makes a potential investor tick is by asking from existing holdings: Which startups belong to his or her portfolio and what do they have to say about the cooperation and how well does their own startup fit into the portfolio?
Tip 3: Know the friends of your investors
Appropriate investors are often already anchored in the industry in which the startup is also active. So it does not hurt to build a solid network there. This is best achieved at industry and startup events. It is particularly helpful to be introduced by mutual acquaintances investors. One can also approach it systematically. Jodok Batlogg from the Vorarlberg database startup Crate: “We often thought about who we wanted to address and then made a plan how to reach this point”.
Tip 4: Good thing takes time
Do not rush. Falling in the house with the door is rarely good, especially when investors are approached at events by dozens of startups. “You conquer investors slowly,” advises Batlogg. At the first meeting often a short performance is enough. A good investment round takes time – half a year or a year is not uncommon.
Tip # 5: Prepare for a Due Diligence Exam
Institutional investors in particular, such as mutual funds, will subject a startup to a due diligence review before being involved. Depending on the size of the investment, this can take some time, so it does not hurt to be prepared. The minimum program should be an update on the development of business for the entire team. In addition, it does not hurt to check customer satisfaction and eliminate possible problems or inform the investor before he even encounters them. “As a startup, it can happen that you get a big organizational wad on a due diligence check, if you have not been careful before,” says Constantin Wintoniak, co-founder of Prescreen. Before such an audit, it’s worth taking a look at accounting, contracts and other organizational issues.