After me and my co-founder Olga raised an angel round, gathered a great team, built a good product and got it off the ground with initial traction and business partners, we started to aim for our Series A round. In my opinion, in Europe Series A means something between 1–10 million €.
By that point we have already been speaking about our travel app Epiclist with over 200 investors and VCs. Now we have scheduled further 100 meetings and calls in the period of the next 3 months. We got invited to pitch pretty much every VC in Europe, who has a name in the industry, so I guess we have done our homework well. Huge thanks to our friends and mentors, who have been incredibly helpful with introductions!
Within next weeks, I would fly to London for 4–5 days, speak to 3–4 investors every day, get grilled or get applauded, sleep on my friends couches in my sleeping bag, get up again, grab a coffee, more meetings (bonus-points: many VCs have awesome offices, so its very cool to visit them), fly back to Berlin, sleep on another friends couch, more meetings, more Skype calls, and so on.
But, after all this meetings, emails, pitches, calls, follow-ups, traveling and hustles I still failed to gather interest from enough people for a good Series A round. We could have raised less with more angels, but we knew we would need to go all-in or nothing.
Still, along the way we learned a lot about venture capital and expectations towards new startups and I want to share this lessons, so you can make it better. Disclosure: For both, me and Olga, Epiclist is our first company and we had close to zero experience before this startup.
Most VCs liked what we working on and who we are. In my opinion, we could not raise a VC round, because we did not have this 3 key points fulfilled. I want to emphasise how important it is to get them right, before you sit on the table with a VC. Of course you need to have a big vision, a big market need and be very passionate about your business (hint: investors feel it when you are passionate about your business). Well, VCs are looking for more than this!
Even if you are an incredibly talented hustler and you are very good with any of the funding “tactics”, VCs will judge you on this 3 key points:
1. You have built something completely new or you have done it 10x better.
You might think that you are working on something new, but having a better designed product or doing some parts different from your competitors is not even close enough. Your product has to solve a problem in a way how nobody else is solving it. At least no one, who already gained a significant market growth. If you work on something truly new and you can show some decent traction, I am sure many VCs will make a bet on you! Have a look on this prominent examples:
- Uber solves a problem, which people in metropolitan cities face every day, sometime several times a day, by creating a new way for this people to book directly with trusted taxi drivers through their smartphone.
- Snapchat created a new way to for social interactions with our peers.
- AirBnB created a completely new market, disrupting the hospitality industry by connecting travels with local hosts in a protected environment.
- Damn, even YO is doing something completely new, which excited investors to fill the $ 1mm check!
Join our Show Me The Money London 2015 event on Thursday, 16 April 2015 from 18:00 to 21:00 (BST), London