A shifting fundraising landscape, evolving investor criteria, and common founder pitfalls were some of the key themes explored during a recent fundraising panel discussion focusing on how to raise investment effectively.
Hosted by our partner, the share scheme and equity management platform, Vestd; the panel discussion featured the contributions from leading experts in the startup investment space. This included Dama Sathianathan, partner at one of Europe’s leading early stage tech for good VC, Bethnal Green Ventures, Xavier Ballester, Director of Brokerage at Angel Investment Network and Ifty Nasir, founder and CEO at Vestd. Here’s a deeper dive into the takeaways.
A More Challenging Fundraising Environment
The panel acknowledged a more challenging fundraising environment due to a combination of global economic factors and a market correction. As Dama Sathianathan put it, “We’re seeing a flight to quality. Investors are being more cautious and demanding to see strong traction before investing.”
This shift means founders need to be prepared to demonstrate a clear path to profitability. Xavier Ballester emphasised, “Investors are increasingly data-driven. Even at the Pre-Seed stage, they expect founders to have achieved key Seed metrics to validate their business model.”
An interesting trend highlighted was the rise of impact driven and sector focused investors. Ifty Nasir of Vestd commented, “We’re seeing an influx of investors with a specific sectoral focus. Climate tech, for example, is attracting significant interest from a new breed of impact-driven investors.”
Investor Priorities: Beyond the Bottom Line
The experts agreed that while financial return remains a top priority for investors, other factors should be considered. Sathianathan noted, “Founders with a strong ‘dream, scheme, and team’ are highly attractive. The dream refers to a real problem worth solving, the scheme is the proposed solution, and the team has the experience and capability to bring it to life.”
Early traction and market validation are becoming increasingly important for securing investment. Ballester pointed out, “Investors are looking for evidence that the problem resonates with the market and that the solution has the potential to gain traction.”
While acknowledging the high rate of startup failure, Nasir offered a reassuring perspective, “Investors understand the inherent risks involved. They’re looking for founders with the resilience and adaptability to overcome challenges and ultimately succeed.”
Common Pitfalls for Founders
One of the most common mistakes identified by the panel was failing to tailor the pitch to the specific investor. According to Xavier Ballester, “A generic pitch deck gets ignored. Research your audience, understand their investment focus, and tailor your message accordingly.”
Communication gaps with investors were another common pitfall. Ballester stressed, “Keep investors informed. Share regular updates, including any challenges you’re facing. Transparency builds trust and demonstrates your commitment.”
Not being receptive to feedback was another highlighted misstep. Nasir advised, “Investors often provide valuable insights and guidance. Be open to their feedback and demonstrate a willingness to learn and adapt.”
Additional Tips for Fundraising Success
Founders should also come to the investment table with a clear understanding of the potential hurdles. As Sathianathan suggested, “Demonstrate a clear understanding of the challenges you face and how you plan to overcome them. Investors want to see a well-thought-out plan for navigating risks.”
Transparency and open communication are key. Nasir emphasised, “Be transparent with investors and show your willingness to listen to their guidance. This builds trust and fosters a long-term relationship.”
In terms of communication, a key take out was to establish a cadence for investor updates. Monthly updates with key metrics and quarterly reports with more depth were suggested as a good practice.
With thanks to all the fundraising experts for giving up their time to share their advice. By following these insights and avoiding common pitfalls, founders can navigate the contours of the current fundraising landscape to secure the resources needed to bring their vision to life.
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