(My jet-lagged post)
I caught up with Scott Allison, CEO of www.teamly.com today. Besides hearing about the growth of his company’s user base, we discussed raising VC in Europe. He thought that Nic, a Partner at DFJ, put this best when describing his relationship with Josh, the CEO of one of our more recent portfolio company’s Conversocial in his blog post - http://www.theequitykicker.com/2011/05/24/welcome-conversocial-to-the-dfj-esprit-portfolio/. (Simultaneously Scott A. wrote a great post about seed investing in Europe which I agree with and was an interesting debate for our 2 current DFJ interns http://scott-allison.net/).
As a caveat, of all the angels and early stage investors I know across Europe, the vast majority will only invest when you have an early version of your product - typically meaning one in beta. So here are my quick thoughts on how founders looking to raise seed/series A rounds should operate (this applies only to consumer internet and early stage B2B co’s):
1. Get an intro to an angel or a VC fund that does ‘early stage’. Obviously you need to look at VCs portfolios to look when their last funds were raised and the investments made to date. Talk to other founders who have met with VC’s and get their feedback on what got investors interested. One founder I know explained his Series B success as conducting a/b testing on his deck and pitch - he and his co-founder would change the order and the style of the deck every single meeting (sometimes in cabs) and would change the wording in the presentation. It finally worked and they raised a very large round.
2. Be able to discuss your customer-problem-solution. If you don’t know what this means pick up a copy of The Entrepreneurs Guide to Customer Development or the Bible aka Steve Blank’s the Four Steps. Hopefully you read all of the blog’s in the 2 hours of spare time you have a day - I sleep 5 hours a night too dude.
3. Be able to articulate where you are in your product market fit. You either have the data to back-up where you are or you have created an entirely new product that is addressing an entirely new market and are raising money on the concept alone (super rare and of the seed deals we do they tend to fall into the latter - of which I will explain in another post).
4. Build a ‘relationship’ with VCs. I think it was Brad Feld who gave the advice to those looking to raise when he said, “if you’re looking to raise a round go and ask for advice; if you’re looking for advice go and ask for money”. What he means is that VC’s are much more likely to take a meeting if you’re looking for a ‘sanity check’ that the product you’re building isn’t ludicrous. I like it when a founder gets in touch for a meeting to pitch but isn’t raising until ‘the next quarter’. He wants to show me the progress he’s made to date and discuss what he’s going to achieve over the next x months as he prepares for his fundraise.
5. Again, get an intro. If you are in CEE or Italy etc. you do not have a large VC base. You’re going to have to get creative with your networking. Don’t pitch me through LinkedIn, Twitter or cold call me - but use your social networks to find someone who knows someone. We are all social animals and love connecting our friends. Attend tech conferences, god knows there are enough of these for you to go an introduce yourself.
In summary, while there may not be as much angel money available in Europe as there is in the US California/East Coast, the same principles apply - you just know how to hustle like Scott from Teamly.
I’d love to hear others comments on this and please do get in touch if you would like to talk :)
