Webinar provides insight into investor interest
Actually, it is quite clear what investors consider important in a startup. Ellen Ploeger, coordinator of Flinc, knows better than anyone how innovative startups should get started and talks about investor thoughts and wishes in a webinar.
Five main points - actually six, because a few tips were added - dominate her story: the team, the product or service, the business model, the customer and money. And the common thread of the session is that startups need to explore broadly so they know what they're doing. And in doing so, they can also turn to Flinc, which supports startups in getting "investor ready" and then connects them with its network of investors.
Burning unnecessary capital
"As a startup, you always have to be careful not to burn capital unnecessarily," Ellen Ploeger says in her intro. ''This reduces the success rate of a startup. Investing in a startup is, from an investor's perspective, a risky investment anyway. An investor seeks compensation for that in a potentially higher return.''
Ellen Ploeger struggles to cram the comprehensive story into half an hour, but just as startups are forced to pitch their story in just a few minutes, she too can finish with a finished story after exactly 30 minutes. Giving webinars is a new method for NOM and Flinc to connect with customers. ''We are still looking for cool startups and so in the current times we have to look for digital forms of contact,'' Ploeger explains.
Flinc has network of 300 investors
About 150 startups report to Flinc each year. About 25 are then intensively coached. Ploeger: ,,No less than 75-80 percent subsequently raise money. That amounts to an annual sum of about €5 million. Flinc draws on a network of about 300 investors, some of whom contribute knowledge, experience and networks in addition to money.
As a first point, the Flinc coordinator addresses the startup's team. Very decisive is the composition of the team, Ploeger argues, because how diverse are the backgrounds of the entrepreneurs, is there enough knowledge and experience on board? Indeed, teams with an eye for diversity turn out to be more successful. Ploeger: ,,It is also important to know how coachable an entrepreneur is. They are often headstrong and that is fine, but only up to a point. You have to be open to critical questions and be willing to learn from them.''
'Able to get things done'
An entrepreneur must show how committed he or she is. For example, by also investing his or her own money. And above all, let's not forget that the team's execution power is a weighty factor, Ploeger believes: ''Have you shown that you are capable of getting things done, both privately and professionally, and that you can make strides?''
Of course, the startup's product or service is also put on the scale by the investor. Patents or the intellectual property must be properly registered. And problem validation, say proof of the challenge that (potential) customers have, must be convincing. Ploeger: ,,If sales are disappointing, it is sometimes good to take a step back and have a detailed discussion with customers about the challenge they are facing.''
Coins instead of subscription
The third dimension, the business model, requires focus. But showing flexibility regarding the business model is especially important. ''I know an IT startup that wanted to offer a service with a monthly subscription,'' Ploeger says, ''but sales were not picking up and potential customers felt little interest in committing directly through a subscription. By discussing this with (potential) customers, a nice interim solution was devised. Customers were given the opportunity to buy coins on the platform for an x amount of money and thus purchase a number of transactions / services from the platform. In this way, customers could get acquainted with the service in a low-threshold way and, for this startup, the first sales suddenly came on fast.''
Scalability, pricing and margins are also elements in the business model that deserve full attention. Ellen Ploeger: ,,Sometimes things seem scalable at first glance, but then all sorts of snags present themselves. Take a service via VR glasses that can be put away via a monthly subscription. A pre-investment has to be made first, VR glasses have to be purchased. In addition, it takes time to train customers how to use the product effectively. Therefore, think carefully about optimizing the scalability of your concept.''
First at home good foundation
Investors will look at the extent to which entrepreneurs are able to focus. Especially when it comes to customers and internationalization. It is tempting to go for as many customer markets as possible and preferably internationally as well, Ellen Ploeger knows. ,,But a startup needs to make sure it lays a good foundation domestically,'' says the Flinc coordinator. ''A successful company like Afterpay, from our own region, first had its affairs in order here before expanding to other countries.''
Investors naturally also look closely at how the startup's funding needs are substantiated. ''Therefore, always work out a worst-case scenario,'' Ploeger tips, ''because that exposes sensitivities.'' And another recommendation: ask for enough money to last a year and a half and at least to the break-even point. Because otherwise, as a startup, you run the risk of constantly having to look for investors when you want to be busy building a company.''
Always be open and transparent
The webinar tells much more than what is touched on in this story. But one tip we don't want to withhold: always be open and transparent. Ellen Ploeger: ,,Suppress the tendency to sugarcoat the story. An investor does serious research and an open and honest story creates a bond of trust. This is important because the intention is always to enter into a long-term relationship with each other.''