Relationships between investors and startups are beautifully complex. Before this marriage-like bond can evolve it is all about the first impression. Knock their socks off! How? Start with getting prepared and take a look at some useful investment key points we’ve put together.

How to

I was lucky to attend a workshop with Werner Wutscher. In his role as an Austrian Business Angel, he gained a lot of experience in the startup investment field and explained to us the investor’s network of Austria and how it works.

I don’t know anyone who would not know what investor means. Actually, that’s a good sign. It means that private money is ready to be invested in high-risk businesses and young innovative people. But the more investment deals are made, the more conflicts between startups and investors develop. That’s because there are more and more unexperienced investors, who don’t really understand how to work with high-risk businesses. Also there are a lot of startups who think that a nice promising idea is enough to get money for it. So how can both sides come together, avoiding a divorce in the end?

Are all investors the same? – No.

Venture Capital (or VC’s) means:

• tough negotiations
• clear terms & conditions
• clear exist strategy
• long commitment

Business Angel means:

• management know-how
• market know-how
• coaching
• network
• not 100 % share acquisition

Do’s and don’ts for Startups

• Manage your expectations and communicate so all involved have a clear understanding of what to expect and when
• Identify your „godfather“ when you negotiate with a corporate partner. Who is your main contact?
• Check terms & conditions of the corporate partner.
• Realistic time management – working on the partnership with the corporate partner might take longer than you think due to its heavy decision-making process.
• Understand the decision making process within the company.
• Be well prepared. because if the corporate partner has time for you, it is only during your personal meeting
• Don’t mix client/investor meetings with pitching events.
• Don’t build castles in the sand. Only talk about plans you will definitely be able to realise.

To do’s for Startups before meeting an investor

Legal form

clarify how many shares every team member will get. There are many cases when startup teams start fighting about their shares and roles in front of an investor. Not good.

Owner managed

take care of not giving too many shares to an investor to make sure not to lose control of your own company.

Governance

Create a format of how you will inform your investor about all the things happening in your startup (regular updates, calculations, team communication).

Strategy

All team members must be inforemd about the startup’s business development strategy and agree with it.

Grants 

Check your grant strategy. Are there any chances you can get some additional financial help from the state? It is always nice, when the startup team checks all the opportunities to cover their costs.

Note: If you notice that an investor wants to know more about the precise figures and is more interested in your financial situation, DO NOT talk about too many specifics, IF you are not prepared. Talk about the idea, concept or market but not about something you are not 100% aware of. You will not have a second chance, if you present yourself as someone who has no clue about their own finances.

Learn how to structure your business model at the Business Model Canvas Workshop (german).

What is important for an investor?

Team

A heterogenous team composed of various competences is something investors are looking for. Otherwise you will have to pay random people to make the essential stuff. And no one can make it better and is more passionate than the co-founders.

Market

Is your market big enough? Do you have any clue about how you segment your potential clients? Can you wake up at night and list all of your competitors? If not, you should be able to do that. Not only for a potential investor but for the sake of your company’s success.

Value

Is your product/service valuable to your clients?

USP

What is special about your product? Is it easy to copy? If yes, what makes it still attractive to an investor?

Profit Margin

What is your pricing? What’s the market’s reaction?

Austrian Network

Business Angels

• AAIA
• AWS i2 Business Angels
• Angel Investment Network
• aws Equity Finder

Early-stage investors

• Speedinvest
• Value Invest Austria

Crowd Investing

• Conda
• Crowd Capital
• Green Rocket
• dasErtragReich
• Regionalfunding