How to Scale a Startup – Investor Talk

The focus of the investor talk was on understanding what angel investors look for in startups and how startups go looking for investment.

With Stephen Houston, experienced angel investor, Cindy van Niekerk, CEO of Umazi and Jenny Ervine from Raise Ventures all hosted by Michael McDowell from Raise Ventures.

Stephen highlighted that as an experienced angel he would receive over 260 pitches in a year and if there are only 52 weeks in a year then that’s 5 pitches a week.

So the key tip was a startup to stand out from the crowd they need to build their key foundations of their product & tech, ensure they have some customers and partnerships, the have a good understanding of their organisation development needs and their marketing all before then look at money, cash flow and funding with a focus on metrics.

When talking about deal flow, Jenny highlighted that the market for deal flow for investors has significantly changed. Investors can receive deals into their inbox every day from all round the world and this has been fast tracked by COVID with online deal platforms and pitching events.

So again startups need to stand out from the crowd and make sure that they connect to angel investors that understand the problem they are trying to solve and their industry.

Michael led the conversation to highlight that startups also need to be investor ready where they have all their marketing, sales, finance, product, support and governance paperwork in an easily accessible place such as a data room.

From the angel investor side of things, Jenny Ervine outlined that as an asset class it is high risk and therefore it’s key for angel investors that are new to the industry to work with experienced angel investors to learn the ropes.

Also by working in groups or syndicates the angels can share knowledge and expertise on the startup and help with due diligence. The connections in the room from angels can always help the startups with connections to customers and suppliers.

One of the questions from the audience was linked to the due diligence process from a startup view and the concern of giving investors too much information that they could utilise elsewhere.

The conversation led both Stephen and Cindy to mention that it is a two way process with investment. The investor is doing startup due diligence but startups must also do due diligence on the investors.

There are some useful tools for due diligence include as Companies House Beta and Landscape VC

And useful fundraising tools include DocSend to Dropbox and Seedlegals  

As a startup Cindy gave some insights into her funding journey so far. Cindy highlighted that it is so important for startups to do due diligence on investors and also read any term sheet very carefully. So far Umazi has had several conversations with some investors and walked away from the deal as it wasn’t commercially viable for the business

Also as a founder with industry experience, Cindy left consulting for large financial institutions in regulations and moved into start her own business solving a problem that she had lived. This also led Cindy to find connections in terms of advisors from her network and also her co founder from her startup network.

Cindy highlighted that the power of utilising the network early on is essential to success of a startup

And finally Cindy pointed out that from a founder perspective don’t forget that just because you think it’s a good idea, doesn’t mean it is. Put through the idea, message and journey and make it simple for the mom test. Run it past people you know and take their feedback and make your product defensible and easy to understand.

Click here to watch back

Due to to some technical issues we were able to only record the last 10 minutes of the conversation

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