How does a startup increase its chances of investing in dealing with an investor?
Hello, my name is Maria Podolyak, I live in the city of New York, in the USA. In New York, I also collaborate with projects and funds, for example, Starta Ventures. After the publication in RB.ru that I am ready to help projects with marketing when entering the international market, I am asked a lot of questions about investments, including. I decided to fix common questions and misconceptions on Habrahabra.
Question 1. An investor or an accelerator? What is an accelerator, in principle?
According to the publication Entrepreneur, in the US - more than two hundred accelerators, each has its own focus, history and specialization. Acceleration program, as a rule, lasts 3.5-4 months, includes trainings, workshops and individual sessions with mentors, they are also local American entrepreneurs with experience, investors, local specialists (lawyers, designers, marketers). The whole intensive program takes place in the USA, that is, the correspondence version is not suitable for you. The full-time option is not suitable for those who do not speak English, because all communication in accelerators takes place in English.
The accelerator goes to the projects at the seed-financing stage, you also need a working prototype and at least some sales or users of the product. Sales always mean that customers need your product, the product is tested by the market, you do not waste time accelerating to empty, but you can scale. Scale means that you will start selling more or attract more customers, or both first and second together. If you do not have a work product or sales, then you probably do not need to apply to accelerators, and even more so to investors. But you can contact your friends for money.
Venture investor is the next stage after the accelerator. You formed a proposal on the market, started selling more, you need money for a large-scale marketing campaign and hiring local specialists. You already understand why you need money from an investor and can explain it in person at a personal meeting in the fund.
Question 2. How to enter the investor?
First, forget about ready-made databases of investors, do not send out proposals for a database of 100+ e-mails. Investors in the United States have specialization, by analogy with a specialist in the right and left nostril.
Venture funds on websites describe their investment focus: industries, countries and stages that they are ready to consider for investment. Study this information before sending any letter. Have you developed a mobile app for young moms? Do not send a letter to an investor who invests in VR /AR money or biotechnology.
In the US there are different services that you can use to find the right investor: Crunchbase, Linkedin.
For example, to search for a relevant investor on Crunchbase, proceed as follows:
enter into the search line of competitors (if you do not have competitors, then you are looking bad),
go to the card company, make a list of those funds and angel investors who invested in them.
You can also enter your market niche in the search string, for this you need to know how exactly your class of products or services in the USA is called. Use Google Translate, and then check to see if there is such a class of products in Crunchbase.
Look for a warm contact with the investor or fund, he's the introduction, he's the intro
Investors value their time and talk with those who spent their time and found a warm contact that will make a presentation to the investor.
Question 3. What should you know about the investor and take into account when writing a cold letter?
Know investor specialization, know whether the fund invests in the early stages, or in more mature companies. In general, it would be good to understand how the seed-round differs from round A.
Do not ask to sign the NDA. The investor, who receives a huge number of pitches a day, simply does not make sense to steal someone's ideas.
Do not ask for money in the first sentence. The best way to attract an investor is to interest him in the idea. Often, most responses are received by those letters that ask for feedback from the investor who is actively investing in projects in your niche. About the search for a niche and Crunchbase I wrote above.
Hire an corrector-native on the site Fiverrr. Be sure to check all the letters to the investor through the native English speaker. Yes, the US is a country of immigrants, it tolerates accents here when you sit at a bar and conduct a casual conversation in a subway car. But if you can not competently correspond in business letters, how will you sell your service? - reasonable investor's question.
Question 4. How to choose what events for the meeting with investors to effectively walk, and which do not? Is there any rule or how to understand that the event will benefit?
In the US there are sites where you can find events that suit you. Plan ahead, because in good conferences the tickets diverge months before the start. For example, the SVOD.org conference already accepts applications from startups in May 2019.
If your focus is an investor search, then you just come up with events such as SVOD, TCDisrupt, frequent mitaps in accelerators. For example, Starta Accelerator often invites investors to Sputnik Space in New York and invites investors.
Question 5. What mistakes do projects allow most often in the pitch deck? What do you advise projects to do /not to do?
In the presentation should be a slide Offer to the investor, what do you actually want and on what terms?
Presentations use data on the market where you plan to work. But you make such mistakes, for example, you make a SAAS-service for accountants, but the figures are used about the market of SAAS-commercial products in general. Or you plan to work in the market in the US, but use the data on the market in Europe.
Often there is also such that in the presentation there is no slide Contacts.
Work with formatting, use one font, hire an equalizer to subtract errors, do not make a presentation more than twelve slides, if you need something else to attach to the letter, make the Appendix.
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