The last Startup Garage of the year was all about New Zealand startup funding – from seed capital to raising an A round. We heard from a range of voices well versed in tricks of the trade both here in New Zealand and in the US – with Wellington angel investor Dave Moskovitz, AngelHQ manager Dave Allison, COO of 8i Toni Moyes, and Chris Smith, co-founder of AREA360 and creator of STQRY.
With over 1150 members, Startup Garage has grown to become one of the largest meetup groups in Wellington, and aims to provide the startup community with interesting speakers to learn from each month, as well as the opportunity to engage with each other.
Here are just some of the interesting takeaways we picked up from the four speakers – each with their own take on everything from pitch hacks, what not to do, and what investors are actually looking for. This post will focus on tips from Dave Moskovitz in particular, so keep your eyes peeled for later blogposts on insights from Dave Allison, Chris Smith and Toni Moyes.
It’s all about the team
For Lightning Lab founding investor Dave, by far the most important thing an investor is looking for when evaluating a startup is the merits of the team, and especially the CEO. He notes that the magic formula for selecting Lightning Lab teams (A programme which he has been heavily invested in from the start) is team, team, team, market, product. And at the centre of that team is the CEO.
Investors are looking for CEO’s who won’t exaggerate the truth or try to pull the wool over their eyes, aren’t distracted by trying to run more than one company at once, know their product and know how to sell it, are coachable and able to see the big picture when it comes to growing a big gutsy vision, as well as knowing when it is time to pass the baton. Having a cofounder is also desirable from an investor’s point of view – to put it bluntly, if you get hit by a bus tomorrow, what will happen to your business?
Don’t underestimate the power of your team
Investors want to back a team that is adaptable and resourceful, and value past experience as well as the ability to fly by the seat of your pants. Another big factor is fearlessness – to quote Paul Graham, if running a startup is like being punched in the face, you better believe you need a team around you who are multitalented, resilient and courageous in the face of the great unknown.
Do you have international aspirations, or better yet, traction in international markets?
For Dave one of the most crucial factors for a startup in New Zealand is an international market perspective – simply put, an investor wants to know how your startup can attract a significant audience size in order to bring in a significant amount of revenue. As a ballpark figure you can expect NZ investors to be looking for a potential 30x return on investment, so how will you prove you are capable of massive scale? Your target market should be well defined and growing, and you should know it inside out. How will you distribute? Competition is validation of your problem but how will you stay one step ahead?
Traction is the be all and end all
Above all else, if you are already selling in the market this is the number one pointer that is going to signal to investors that your business is worth backing.
Are you looking past this investment round?
Dave, Dave, Chris and Toni all stressed the importance of understanding how this funding round will become part of a longer term investment picture. Do your investors have deep pockets and will they want to go multiple rounds with you? Who have you or haven’t you approached and why? Do the investors align with your business and align with each other? How will you spend the money, and how will it feed into increasing the value of your business for the next funding round? What is your exit strategy?
Don’t forget that it is still your company
Post securing investment, make sure you do not lose sight of the fact that it is still your company. Investors are there to provide valuable advice and feedback, as well as that all important cash injection, but don’t be afraid to push back when necessary. A founder that is too agreeable and says yes to everything worries investors. Show some backbone.
Finally, if you are a startup doing awesome stuff but flying under the radar make sure you check out sotw.nz, a site run by Dave that unearths the amazing ventures that are out there but haven’t been heard of yet.
For more information on Startup Garage’s monthly meet ups, check out http://www.meetup.com/StartupGarage/