5 tips for those seeking venture capital

Time to raise venture capital for your startup? What should I consider? How do I get investors to open their wallets? Our business coach Deborah Lygonis connects startups and investors and has raised millions in venture capital herself. Here she shares her top tips!

1. start on time

You've probably noticed that things take longer than you expected. This also applies when you are raising capital for your startup. Be on time so that you don't run out of liquidity and panic when the cash starts to run out. Raising capital can take anywhere from 3-9 months, sometimes even longer. Especially if you don't have an established network. The best time to start is when you don't really need capital! Raising money not only takes a long calendar time, but also many hours. It involves many calls, emails, meetings and follow-ups. In addition, investors have to do their own due diligence.

2. remember that you will be "together" for a long time

Think about what type of investor you want to bring in? If you are in the early phase, perhaps it is soft money you need to start with? This could be a loan from Almi, research money from Vinnova or similar. Don't forget your customers as a possible early funder. Can you do a paid pilot project?

If you are past that stage and want to bring in investors, you have other questions to consider. Do you want "just money" or "smart money"? In other words, are you looking for investors who can provide more than just capital in the form of expertise, networks or customers? How long-term are the investors? Can they come along on more issues? As you have a long journey together, it is also important that you feel you can respect and get along with the person in question. Just like any long-term relationship!

3. Do your homework and network

When looking for investors - do your homework before booking a meeting! Who are you meeting? What companies have they invested in before? What stage do they usually invest in (seed, A-C rounds)? It's frustrating to get a long-awaited meeting if it turns out that the people you're meeting are investing 50 million or more - if you need a tenth of that amount! However, the meeting can still be interesting if you want 50 million at a later stage. An important part of the work is to build relationships for future rounds as well.

When you are in the meeting - dare to ask! Ask questions about the amounts they usually invest? Do they want/need to co-invest? Ask them at the table if they are interested in moving forward! If they answer no, ask why - and ask if they have tips on someone else you can contact.

4. So what, why are you interesting?

Many startups are incredibly good at presenting what problem they solve, what customer value they add, what a huge market there is, why they are better than the competition and what a great team they are. But do you have a clear answer to why the investors you meet should invest in you and your company? Think about what motives investors have when they invest? For example, some only work towards impact and the environment. Then you need to be able to show the upside of investing in your company from that perspective. Some have clear return requirements and time limits - for example, they want to make 20 times the money within 5 years. Does your company fit into these requirements?

Sit down with your presentation and ask yourself; Why us and why now? If you have a clear answer to why they should invest in you, include it in your pitch!

5. Exit plan and long-term strategy

When you are raising money for the first time, it is important that you have a clear idea of how you want to exit, i.e. sell the company, before you meet the investors. This could mean selling the company to an industrial player or listing it on a stock exchange. If you don't want to sell, but build a company that you will work with until it's time to retire, then the question is whether you should raise venture capital?

Another important point is to make a longer-term funding strategy, so that you have a plan for how much capital to raise over time. How many rounds do you need to do, and how much total capital might be needed? The long-term plan is important for investors, but even more important for you as an entrepreneur to understand how diluted you will be at different stages.

One last tip! Keep your network of investors, partners, suppliers and customers informed about the company's development. Everyone likes to follow what's going on and see the company's success and progress. It's an easy and inexpensive way to build relationships and generate interest in future capital rounds!