The Atomico’s State of European Tech published yesterday had a lot of interesting data. One thing that stood out was what are founders really after when they take on investors. The report is about funds, so not necessarily incubators and accelerators, but sometimes those also include investment, which counts as pre-seed rounds. So what are the 5 things start-ups are looking for from investors, why they need them and how to provide them.
Incubators and accelerators are most likely one of the first investors of a start-up, in case they do invest. If not, they surely see the process close by and hopefully contribute to it. Fundraising in the early stages is all about the team. Do they have the skill and the will. In order to support start-ups here, incubators and accelerators should be well networked with investors. By investors we can mean individual angels or angel networks, VCs and VC networks, family offices or other founders who have exited and started investing. Maybe even more important is support in building and delivering the pitch. Young founders, especially first time may simply not know what the investors are looking to read from the pitch and how It should be delivered. But pitching is a whole other topic, stay tuned.
2. Partnerships leading to new clients
Network is always something accelerators and incubators are valued for. For serial founders these networks might already be there, but first-time founders need some assistance. We all have LinkedIn and given a few years a network can be bootstrapped to some extent. Still having access to sector leaders or simply many companies, that are B2B customers to your start-ups is very valuable. Building up these networks together with targeting a certain kind of start-ups equals in a successful program.
3. Go to market strategy
Go to market strategy is basically a tactical road map. How to get your product in the hands of your customers. Paying customers. First time founders simply need some guidance in building this roadmap. Incubators and accelerators are very well equipped to provide this support. Mentoring around product- market fit, customer profiling, pricing, marketing, sales and support is what every program should include. Getting more products successfully on the market shows results not only for the start-up, but also the program.
4. Leadership coaching
The first three items listed are all external, but this one looks at the founder. Founders, leaders and managers are three different things. For a team to work, and especially remote teams that grow in numbers, there needs to be a leader. Leadership coaching is something best done one on one making incubators a perfect setting for such development. Learning to be a more effective leader, motivate people and communicate values is the backbone of any team. There is no right and wrong, there is styles, and a good coach enables leaders to analyse themselves and adjust to the goal.
5. Cashflow and forecasting
Just like founders are not necessarily good leaders, they might also not be good with numbers. Understanding cash flow and forecasting is essential to running a business. Although things can look good on paper, cash may not be in the bank. Forecasting is also a big part of fundraising as estimates and growth projections are what fundraising is built on. So get your excel skills polished and set up a financial management and forecasting session. It may not be what they want to do, but definitely something every founder has to master.
The abundance of capital for very early-stage start-ups is growing, thus incubators and accelerators need to show their added value. We listed here 5 things start-ups are looking for from investors. Depending on sector, business model and stage there can also be other very specific things they are looking for. The key is probably the same as what we tell our start-ups- know your clients’ needs.