Startup+investor matching is like pulling teeth, so help me validate my solution
My biz partner and I have recently been seeking investment for another business we're involved in. To say it distracted from the day to day running of our bootstrapped startup is a massive understatement! For months we have ground to a halt while we get the investment we need to push on further.
And every other founder I speak to says the process of finding investors is like pulling teeth - but slower; very very slow, over many months.
We've all seen people hand out or try to sell lists of investors they've scraped off the internet. But this seems such a lazy and spammy solution.
So as a tech architect, I see a problem and like to dive in and solve it today. But slow down matey,... lets just check I've got the problem and possible solution right first...
I'd love some feedback on my proposed idea. And then it's on with the coding gloves and time to build in public - whether it's exactly my idea, or one with a few pivots based on your generous feedback.
Please take a look at this one-pager and hit me with your thoughts, good or bad: https://www.steveprocter.com/concept-follow
A few resourcs for you... (happen to see this when looking at "community building" for a project). Some good perspective!
The Tricks to Building and Engaging Your VC Firm’s Community https://bolotsky.medium.com/the-tricks-to-building-and-engaging-your-vc-firms-community-a92b75105af8
The VC Community Honeycomb: Identifying and Prioritizing Your Firm’s Community https://bolotsky.medium.com/vc-community-honeycomb-61a2fac88c17
Ecosystem, Network, and Community. https://bolotsky.medium.com/vc-ecosystem-network-and-community-2778c4054c18
thank you @upaya I will have a good read
Currently investing in early stage companies and used to work for accelerators.
I hate to say that but matching investors and startups are supposed to be hard, I wish it's simpler. But I really enjoy the process of hunting the next deal.
If a bunch of quality startups can be easily discovered, I'd doubt their quality. I'd not create a one-pager because Crunchbase, PitchBook already did the job.
oh dear, that feels typical of an investor. really appreciate the feedback from the other side of the coin @felix12777 but it just validates for me that the whole process is one-sided and broken.
A lot is going to change in the investor world as more and more small angels come together to disrupt the game. It isn't an overnight thing and might even need a little jiggling of regulatory aspects too. But things are happening in a few areas, and my plan is to be a part of this very big play.
Think r/wallstreetbets for startups - lets call it r/startupbets ;-)
Hey. I see value in matching startups and investor. My suggestion based on my current startup's fundraising struggles is to "match" startups and investors in very targeted super verticals so that you have aligned interest in a commen space. My biggest pain point and interest in a platform is getting "real" feedback from investors. Fundraising is a process so convesations (or a seriers of conversations) are important! Wondering - is that part of what you are hoping to deliver! Good luck!
Hi Ben, yes that was the idea.
So an investor "follows" a startup that they have matched/like the look of. The following can go on for months and the startup provides regular updates of important milestones (we just got our 100th customer; we got a positive writeup in The Times, etc). The investor can also see that 12 other investors are following the same startup, so some FOMO builds up as he worries he may miss out if he waits too long.
Right now you send them your 2-liner elevator pitch or a deck and they decide in 30 seconds. And if it's a no then "game-over player one".
Whereas I want to see the game move towards that conversation/follow process that allows a sort of relationship and longer-term interest to build up. To the point where an investor gets off their arse and actually calls you to say "I've been following you and I like the traction I've seen; lets talk".
So far it's too one-sided and whilst money is of course important, investors would be nothing without the creativity and amazing brains of startup founders. I sometimes think the balance of founders being subservient to investors is unhealthy.
However, I have taken on a lot of input in this thread and it does seem I could be banging my head against a wall with getting investors to buy in to this concept.
So I'm still trying to figure the exact model. Keep the ideas coming ;-)
One last suggestion is finding emerging verticals (like digital therapeutics, games for health/education). It is my experience that investors have a harder time finding startups in this space (relating to its relative newness). Example: Health/Wellbeing startups building in psychedelics, digital therapeutics, etc. There are lots of communities where you can find these types of startups and offer the "curated-targeted" platform for startups and investors (who do not know where to look). The problem with that... it is always a moving target.
Sadly I don't know enough about what investors want/need to validate if this would be useful for them.
I do know as a founder I used platforms like gust, seedinvest, founderhub, foundersclub etc to potentially meet investors. The main attraction being that they had some level of assurance to get my startup in front of investors.
Don't know if that helps
thank you. do any of those sites have really early startups on them? whenever I look at these types of sites I just see those already asking for £250k seed or series A onwards.
These are primarily for pre-seed or seed stage.
This is an interesting idea but you need to keep in mind that, as with a lot of things in life, there are differences in kind and differences in degree even for the concept of investing.
The life cycle of a new venture aka startup, can broadly be grouped into 4 stages:
These stages determine the kind of investors you'll attract and have success with. Unless you are building something the partners at Sequoia think is the next big thing*, you are unlikely to get an audience with them if you are still at the concept or startup stage.
As a rule of thumb:
Angel investors serve founders in the concept and startup stage.
Seed investors serve founders in the startup stage.
Growth investors (i.e. VCs) serve founders in the growth stage.
Of course, there are exceptions, e.g. YC used to only invest at concept and startup stages but now they invest at the growth stage because it gives other investors confidence to participate in capital raises by their portfolio companies.
Then there are highly desirable—top tier firms that get a lot of inbound deal flow. The lower tier firms have to work hard to source deal flow, so their sales motion is more outbound than inbound (this might be an opportunity).
There's also the non-traditional types of investors that openly encourage founders to apply directly:
You have to be super clear which group of investors you want to target in your website copy.
*Sequoia have their own in house analytical tools that told them that messaging would be huge, so partner Jim Goetz kept pounding the pavement until he could meet with the Whatsapp founders so the firm could invest, even though Whatsapp were not thinking of taking outside investment at the time.
thank you @ayewo. Your advice validates my thoughts...
growth vc's and the top tiers are very well covered by a lot of big professional outfits. and personaly I find this end of things very dull and corporate - not my thing and even if it was there is just too much big competition
bootstrappers, angel and early seed is where I think there is still a lot of room to add value and a space where the whole game is very difficult - like pulling teeth ;-) and working with lower tier firms to improve their inbound flow has a lot of opportunity
So I just need to figure the best way to model this to be useful to all players and be a model for me with a decent revenue! There is definitely a problem, and a market. Just gotta keep digging to find it ;-)
Thanks for all the feedback everyone. I now believe the best way to achieve something here is to do this as a report for investors. So...
I compile a report on the emerging tech startup world together with details on pre-funded or angel-led startups and their founders - my ambition is to have 1,000 startups in it.
The full report would be freely available to all startups included in it. And sold for a small sum (say £250?) to investors; this could include 12 months access to updates. I already have a handful of investors stating some good interest.
I'd love: (1) some thoughts on this model, (2) to find a great growth-hacker cofounder to help sell it and share the success!
thanks for the input @hatkyinc. tbh I am not personally interested in later stage as that is when it all becomes very serious business; and there are already plenty of providers to help with that.
I agree it's an unfair/unbalanced market.
Sticking with early-stage startups, can you think what would make investors want to use it?
Make it unbalanced as they expect :shrug:
The business needs to prove themselves highly for it to be worthy like they would without it.
In a way, you need a process that filters out many wannabees
What are some initial indications they get from the current process?
The thing is not to make it easy for the startup, but let many fail in the process if they just aren't where they are expected to be yet.
So for the initial one for example this can be semi-secret service you have to have an invite to get it, and these should be limited and not found around the web (it's common for VCs to expect a new startup to be referenced by an existing one they already invested in)
For the 2nd you can make a test interview and score them, be really picky on score, and make them pay for taking it, not cheaply and don't allow them to retake it for a while.. like a couple of months.
It's probably not the answer you after, IDK if you'd want to make that service, but that way would probably be actually valuable to the market side of the VCs and possibly as a whole, due it keeps the unfairness to the business. (you can play with it over time and/or have a 2nd service that helps people cross the chasm.. would probably get built even without you if this works)
If the difference between what sound right (intuitive) to what's valuable for the market
Just my personal thoughts, I'd be happy to be proven wrong.
The other side of the coin are services that split investment and go sell shared investments to smaller investors, that's a solution that deals with increasing the demand, but it's filled with legal stuff, "credited investors" only in most places, so it's totally limited anyways. and still doesn't answer the core issues of finding which ones are worthwhile.
Fabulous thoughts, nice! Totally enjoying the collab!
Don't forget that one of the key USP's of this idea is that the startup must post regular updates for big milestones - and this is what the investor is "following". So they follow a startup much earlier than they might normally so they can watch them grow and deliver the progress they originally promised - or they get unfollowed. Updates are concise monthly 100 words for example and the investor can whiz through several startups very quickly and efficiently. Also, the investor gets to see how many other investors are following a startup - to create a bit of FOMO.
And, I think I could make it hard for the startups, and rightly so I guess. As you have suggested I could start it as a "I match and introduce you to the right investors using a mix of technical algorithms but also manual analysis and contacts". I had already been thinking about an element of consultancy as this is inline with my experience, 30yrs in biz/startups and as a venture builder.
I would still build out the signup forms for the startups so I can collect the initial data and make it feel a little bit Saas'y. Then provide the interview/analyse/score/qualify bit, followed by lots of emails/calls to the most appropriate of my 1,000 Linkedin investor connections.
But to put a price on it, hhmmm, how can you charge someone to tell them their idea is rubbish and to come back in 3 months? Or perhaps this advice actually has a value ;-)
I'm mostly thinking of the vc "following" as low value noise, they don't need an infinite news feed, just trigger events and/or intros to really special cases
What I think would happen is a big discrepancy between what people are at ease to say and what they actually need
As VCs don't want to burn bridges they use the niceties and avoid saying an explicit no, that would probably translate the same to the platform by following too many to the point of a useless feed. I think for the success of the product this has to be prevented in one way or another.
On the side of charging and rejecting think of it as either a test or a competition, you could do a querterly competition and only the top few get intros. You can make the pill easier to swallow by providing actual feedback like at minimum scoring by different dimensions of some other resulting artifacts
An equivalent to set your mind is applying to an accelerator is a competition since it's free there isn't much feedback for the rejection just try again next time in 6/12 months
As for charging you don't have to or make it optional if you can get sponsoring/financing from the VCs, but in sports let's say there is registration fees plus expenses to actually get there..
nice, very interesting! "vc's don't need an infinite news feed with so many that it's useless... just trigger events and/or intros to really special cases"
Ok I think I'm getting it now. Basically, lower tier investors for bootstrappers/angel/early-seed stages want or would like...
increase their dealflow
the dealflow is pre-qualified by a trusted system
if something is a "not now, come back when X is achieved" they want this process managed and streamlined so their time isn't wasted every 10 days with pointless updates. and if "not now" actually means "no!" they want the system to handle this
all of this is shown in a simple manner and only updated and re-presented by the trusted system/pre-qualifier when there are genuine updates. but the ongoing qualified updates are an important part to show growth and prove the startup's concept and market traction
rather than just be sent one startup at a time, the system collates 10's or 100's of startups at once in a more efficient way for the investors
all of this isn't just a one-off, but an ongoing solution
Big investor firms take people on to do this and call them "analysts". And growth/series-A stage startups are already in 3rd party data systems that provide it.
But my theory is that a lot of lower tier and early-stage investors could benefit from a system that helped them with earlier stage startups. And those early startups currently have no efficient way of getting themselves in front of the investors.
Something I've been told by a bank manager and learned the hard burning way
"Your business is correlated to your customer, if your customer target is the lowest tier business, you'd have a hard business..."
I wouldn't touch them myself, have a real hard RL think about that...
It's different if you use them as a starting point to if they are your whole focus.
Also, I think sometimes "noise activity" should be separated from actual work, I suspect that missing "deal flow in the pipeline" etc... is a lot of noise work, they need to show off inside and outside, and fill some psychological and math needs, like you can't get the right 10 investments if you only looked at 10-20 options, you have to show somehow you choose 1:100-1000 (or whatever ratios are for that), but it's work noise rather than actual work and a system that's not exclusive to them won't fill the psychological need... (you can partially solve it differently by letting them "build a custom system " on top of components and possibly a data stream, but what I mean is they have to fill control and being different and some other things..)
I like the direction with pre-qualifying and saving the investors time and somehow making an implicit/actual "no" for the system while officially it's "not now", should probably still look the same as "let me know when X happened", but they know that X would never happen (X could be a complicated term)
my definition of "lowest tier" is not, I suspect, what you think it is. I do not mean bottom feeding dregs. I simply mean the investors that are not in the Premier League. That still leaves tens of thousands of very legitimate investors who are great players, but just not getting the same dealflow as the big Sequoia's.
Appreciate the thoughts, but I'm not quit sure of your argument, or indeed if it is simply thinking too hard ;-) But if I was an investor and somebody offered me a more streamlined way to see ongoing details of thousands of startups, I think I would be very happy.
The purpose of the system is not to be noise. It is an important business tool for them. Indeed this is one reason why I already rejected doing it as a mobile app - so a bit like Shapr. Because a Tinder-style app to swipe startups for 10 mins a day while you're eating breakfast is just a silly gimmick.
You're addressing only the technical need
but the thing is actually a 1000:1 supply vs demand
I think the VC side in reality needs that hardship on the startup side as the filter, that only keeps the high skilled sales + overworked "would find someone to say yes" attitude...
While it depends on round types etc, you might find more interest in a bit later stages if you can just track performance numbers to float the over achievers / product-market match happening...
I am saying this is unfair unbalanced market and just a normal equal platform won't do much in reality, due you'd probably get positive responses from everyone