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5 tips for raising capital online – Selected

There used to be so many in-person events, pitch competitions, battles, and activities for investors and startups to connect. All the startup-oriented conferences would usually provide founders with such an opportunity – to meet the right investors & share their great tech-solutions.

These conferences created a perfect environment for a startup to showcase their business ideas for this eager audience that came to learn more.

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A captured moment from TechBBQ 2019

2020 has shaken every industry, reversed our know-how, and re-structured our values & priorities. As we are getting closer to a full year of the pandemic, one that closed familiar opportunities and challenged us to create new ones. It is not news that we all are getting tired of digital communication platforms such as Zoom, Microsoft Teams, LinkedIn – you name it.

Notwithstanding all the mentioned challenges above, I am a very optimistic person, and I always like saying – let’s look at the bright side. In this case, we need to see how we can use this time for embracing the digital transformation and the new rules of the game called virtual.

Online capital raising has shifted as well because of the global pandemic. Obviously, there were a lot of unknowns in this field, and these ‘unknowns’ led to what we have today – Startup Capital.

I’d like to share some thoughts and learnings, as well as feedback from our investors and founders provided after our event. The goal is that some of this knowledge will help you prepare for your next online meeting with an investor, what to be aware of, what to expect, what are the potential processes.

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Startup Capital – what is it?

Startup Capital is a Virtual Matchmaking Series event that was launched in June 2020 by TechBBQ and partners as a result of Covid-19 outbreak. It connects pre-seed, seed-stage, and series-A startups with investors through virtual facilitated matchmaking activities. The first June edition invited the Nordic Startups and Global Investors for an online matchmaking.

In our October 2020 edition, we were happy to have the Baltics involved as well, adding and including more promising startups and investors. This helped us to bridge the gap between the Nordic and Baltic countries and expand the project scope as well.

The goal of Startup Capital is to facilitate and curate efficient conversations between startups and investors to:

  • increase investment flow
  • enhance impact
  • align capital
  • reduce perceived investment risks
  • encourage continuous collaboration between investors and entrepreneurs and
  • to exchange financing and/or knowledge flows.

Project partners: byFounders, Silicon Valley Bank, Danish Business Angels, Danske Bank, Vækstfonden, Innovation Centre Denmark, Innovations Fund

Selection Process: The selection process was made based on startups’ and investors’ extensive applications, startups’ pitch decks, and the investors’ directions and descriptions of what they are looking for.

Key Criteria Matching and shortlisting the startups was based on:

  • Vertical
  • Ticket size
  • Broad category
  • History
  • Own knowledge and network

Platform: For us, it was essential to have individual meetings and ease of  welcoming new conversations, as we are talking about a large number of customized meetings. On average we had 5 meetings per Investor and in total over the last 2 events we had nearly 500 meetings arranged between the Startups and Investors.

We chose Hopin.io, and it went quite smoothly despite some technical challenges. This platform allowed us to set up the session rooms for Investors and Startups and had an easy navigation between the two.

After organizing our first event, we realized how important it is to record an informative demo video, explaining and navigating the platform.

However, the key challenges were related to the sound and video. For some founders and investors, technology was on their side. Our solution was proposed prior the event – setting the right expectations. In cases where something does not work – move to an external meeting room via Zoom or any other channel.

For the future, we will have to look for a more practical solution on how to avoid this situation.

How to draw attention?

I have two pieces of advice: seek opportunities to connect with Investors and continue strengthening your online brand presence.

Startup Capital provides you an opportunity to connect with at least 3 potential investors with little effort. And those 3 investors know at least 1 more investor to connect you with if they believe in your idea but cannot invest.

So before you even get a chance to perform your pitch, there is quite a road to travel. Make sure you have an existing online presence, as well as a clear value proposition working in accord with your business plan.

In 3 words: prepare your brand.

Do your homework

Go with the right intentions and once you have your meetings scheduled – research your potential investors. Review their portfolios, ticket sizes, and investment activities.

The more you know, the easier it is for you to steer the conversation in your favor.

Set the right expectations for your capital raising journey

Expect the best but be ready for the worst. As one of our startups said:

‘’It’s never going to be a perfect match, or all matches ideal. But we are learning with every meeting and grateful for an opportunity.’’ – Startup Capital 2 participant, Founder.

Every time you pitch your business to investors, imagine that it’s a performance where you keep your personal feelings aside, throw away your doubts, and share your business and passion, inviting investors to join you on this journey.

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A captured moment from TechBBQ 2019

For some founders, raising capital is a fast and successful process. However, that’s not the case for everyone.

‘’No matches yet. That’s completely normal by the way. We invest in roughly 1/100 of the companies we see.” – Feedback by the Startup Capital 1 participant, Investor

Some reasons for passing on investment:

a) Purely for math reasons. It’s essentially a 1/50 or maybe even 1/100 chance whether we invest in a given company (especially through matchmaking where we have not screened the companies ourselves). So with the volume of 5 companies, it’s quite likely that none of them will be the perfect fit.

b) Then again, the world is not just math. You can also say that those 5 companies were not the ideal startup teams we’re looking for. They perhaps were tackling a market too small, the team was incomplete, or the founding team was not yet fully committed. There was no significant technology or IP included in those startups. It’s a different case for every team, of course.

So, we can see that the road towards your first investment can be long and challenging, but when you are looking for the right investors – get to know them; their portfolio companies, values, and directions.

Practice makes perfect

There is no golden ticket to raise a fund, but by practicing and participating in other events that include raising capital, you get a chance to observe what the judges, usually investors, are looking at, what the key comments are, and what types of questions they ask.

And if you can’t attend such meetings, watch previous events online. Rehearse and be authentic in every meeting. Learn to listen to what your potential investor asks and what they are looking for.

Pitfalls of online investments: what to avoid?

Since everything is happening online, there would be 2 pitfalls to avoid:

  • Do your homework and learn about the people and VCs or BAs you are having a call with
  • Ensure a good technical setup for your calls with investors. The first impression counts.

One of our Nordic Investors, who participated in both events, says:

‘’Double-check your wi-fi and learn how your camera and audio settings work. You’ve got one chance to create a good first impression, and – consciously or not – weak connections and your forehead on camera tend to leave a poor impression. Instead of technical hassle, you want to be able to focus on the actual beef: you and your company.’’ Startup Capital 2 participant, Investor.

I hope this event analysis and a couple of suggestions helped you think about what you can improve on how to increase your chances of raising your next round.

Now it’s time to get practising, because these three events are coming up soon. See you there!

  • Seed Round Investor Panel + Startup Pitches – November 19th
    Pitch to a panel of seasoned investors, and learn what and how they like to invest! Maybe it’s a good chance to practice your online pitch?
  • A Round Virtual PitchForce – December 4th
    PitchForce is a weekly event for early stage high-tech startup entrepreneurs to get a chance to deliver a 4-minute elevator pitch to a panel of seasoned angel investors. One more opportunity to practice your pitch and get some feedback.
  • MyData Online 2020 – December 10-12th
    MyData Online 2020 Conference will be feature more than 150 high-quality presenters from all around the world to share their expertise. Learn about purpose-driven data use, data governance, and much more.

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Event strategy for VC

When I started working in VC, conferences were treated as a nice extra. Something you sprinkled on top of a sourcing strategy that lived elsewhere, often in a partner’s address book. Being an investor meant you mainly had to spend a few days out of the office per week for dealflow meetings, you attended the occasional panel slot if you had a friend on the programme team, shared a few tweets and that was it. But today conferences are part of the core marketing infrastructure that keeps the firm in the flow of founders, operators, LPs and peers. These events act as a pretext to re-engage with warm or cold leads, whether a fund is at the beginning of their investment cycle or deep in fundraising for their next flagship fund.  Every tech city has its own flagship event. If you are a generalist VC, chances are you can easily identify 20 conferences that you are expected to show up at, and 40 that you could attend.  So, where do you start? How do you really decide whether it’s a good reason to attend? Most investors only see the tip of the iceberg: the logo of the headline conference. They rarely see the resource constraints that come with executing the field work. That tension creates too familiar operational dramas for marketing teams, including last-minute “Where is my ticket?” message, partner demands for main-stage slots, and the flurry of FOMO driven interest because another prestigious fund has been announced as a partner. And yet, despite common belief, investors don’t attend conferences for the parties.  When I look at the 100 plus conferences I have attended over my career, I tend to group the real reasons into 10 buckets. 1. Qualified dealflow Good conferences act as magnets. They pull in the startups that are relevant for a specific thesis, geography or stage. For generalist VCs, niche events are a way to see a concentrated sample of the market in two days. For more specialist firms, these events are a way to go deeper into a vertical, and to be visible in that niche. 2. On-the-shelf networking Conferences provide “on the shelf networking”: the infrastructure of meetings, lounges, apps and social events is already built. You simply step into it. For investors, that is valuable across several fronts: they can connect with  founders and future founders, operators for senior hires, practical experts and   LPs exploring new funds.  3. LPs and the (secret) permanent fundraise Most funds are always fundraising. Events that attract LPs are therefore particularly attractive. Even a handful of good LP conversations can justify several days out of the office, especially if this involves underground Berlin (Super Return) or a roundtrip to the French Riviera (IPEM).  4. Media relationships Some partners only have meaningful conversations with journalists at conferences, mainly because engaging with the media is not part of their day-to-day routine. For them, conferences provide an efficient way to concentrate press engagement in one place without having to pitch themselves. For marketers handling complex logistics across several markets, an event is often the one moment where the stars align. 5. Thesis signalling Good investors have local-based theses and want to attract dealflow consistently across several years, whether or not they have cash to invest. Attending Stockholm-based conferences is a way to say, “we are serious about the Nordics” without having to buy billboards in the airport (although some folks do exactly that). In that sense, VCs and event organizers are sometimes competing as community enablers. Both are trying to become the natural node for a given ecosystem. 6. Speaking and thought leadership Speaking slots are a form of social currency in venture – and comes with a few perks such as “speaker dinners”. Many partners enjoy being on stage and the status premium associated with it. I guess there’s a reason why some people are more interested in how they will look like on their Slush stage picture than what they are going to say. Beyond ego, speaking opportunities give VCs a platform to articulate their thesis, test a narrative in front of a live audience, and attract founders at the very top of the funnel. Some of the best inbound I have seen has come within a week of a talk. A founder who heard a line and followed up. A journalist who spotted a quote for a later story. Someone who waited backstage with a pitch. This is part of why VCs can be VERY intense about speaking slots. From their perspective, stage time is not simply a visibility perk. It is a key input into the marketing engine. 7. Curation Some conferences have a strong reputation for curation. You trust that if you turn up at TEDx, DLD, or similar events, you will be challenged and inspired. For investors who spend most of their year buried in spreadsheets, this is attractive. Alas, I think the content quality has nosedived these last couple of years so it’s less true. 8. Portfolio support Serious investors use conferences to help portfolio companies with commercial introductions, support them on talent hunting, offer stage visibility and access to LPs, journalists, and peers. When a portfolio company is having a big moment, everything else tends to rearrange around it.  9. IRL experiences Many VC franchises have grown used to operating digitally. What is often missing is a reliable in person interface for the broader community around the fund. Conferences solve this by using those moments to crystallise the community you are building.  A simple breakfast, an LP catching up with several of your founders in one afternoon: these are small touches, but repeated over ten years they are part of how trust compounds.  10. Watching to competition Conferences are one of the few places where you can literally see how competitors behave with founders, with LPs, with the media and with each other. Who is always surrounded by founders. Who is quietly building a niche. Who is sponsoring heavily in a

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