Raising Start-Up Capital
The path to securing investment for your start-up can be steep, twisted and challenging, Darren Hamer decided to interview a veteran in this field, Mathias Plank , the founder of Sticky, the world’s first webcam based eye tracking platform (formerly known as Eyetrackshop).
Mathias was interviewed by Darren Hamer, (Managing Director UK, Sticky) where he outlines the path to securing investment for your start-up.
Once your concept is in place, one of the key things you need when raising finance is to know the right investors. When you have identified your target investor, get an introduction to them if you can. If your idea is good and in their sweet spot, just get in touch with them. You need to make sure that you’ve got investors interested, before launching into the market.
It’s important to do your homework and find a potential investor that is interested in backing the sort of business that you want to build. That’s what I did around four years ago, when I started looking for investment for Sticky. It was the technology and the innovative way it was to be used that originally attracted interest. It is important to have a unique offering, but even more important than the idea is the team. Investors prefer investing in start-ups with a great team and a mediocre idea, rather than the other way around.
Our innovation was a biometric online eye-tracking solution, a major breakthrough in understanding how visitors view online advertising. We have created a platform that provides brand advertisers and agencies with objective data to improve their digital performance, and can be used in conjunction with all partners in the digital ecosystem to increase ROI.
There are certain things that you have to get right if you’re going to close a deal. A good, solid, clear and well-thought out business plan, a clear understanding of how you will become successful in the marketplace, and most importantly, a strong team. Putting this together can be the deal maker. Investors want to believe that your team is capable of delivering your plan, and if it does not work out then they have to come up with a new plan that works. It’s all about execution.
Timing is another important factor. Strategic investors could probably contribute both with sales and growth, but could potentially be very damaging for an early start-up. Strategic investors tend to be slower than traditional venture capital firms.
Try to remember that running and launching a business is interesting because it never ends up as you planned. That means you need to know how to adapt and be flexible. You also need to remember that the investment process can be lengthy and complicated. In most cases, time spent on raising funds should better be spent running the business. This applies especially in the early days of a starting a new venture.
My last piece of advice would be to not over-raise. Somebody once said to me: "Don't raise a lot of money. Then you'll be on the express train. Take the local train -- it goes slower and there are more places to get off."
Photo (cc) kennysarmy.