It’s always sounded like just something every VC says: “Actually, we’re looking for something different from other investors.” But, to be fair, it’s true. Or at least, it certainly works the other way round: entrepreneurs should be aware of the differences between individual investors and the companies they work for before they sign any deal.
That was one of the main learnings from Capital On Stage at the Mitte offices of Hengeler Mueller on Tuesday, with more than a dozen VCs taking to the stage to give short pitches on what they are looking for and, perhaps even more importantly, who exactly they are.
Because, folks, you need to remember: Investors are people, too.
In all seriousness, however, the event was a great opportunity for the startups in the audience to pick up some top tips from a wider range of VCs than you would normally find at any one event. So what else did we learn? Here’s a selection.
Mark Schmitz from Lakestar told the audience that the event wasn’t about investors on stage, but actually service providers on stage. Entrepreneurs need to consider what they should demand from VCs – how closely do they know your business model, what sort of contact will there be between you, what introductions can they make.
Lakestar specifically, he added, spent a lot of time connecting their portfolio startups with other VCs in the US.
Secure the Right Profile of People
Eugene Mizin from Mangrove Capital, meanwhile, revealed that they saw their role as being cheerleaders not only for their companies, but for the scene as a whole. “We like to challenge all founders to think bigger, to pursue areas they may not have thought about.”
He also told warned the audience that CEOs must recognise that raising money will take up more than half of their time, and that they need to make sure they have secured the right “profile of people” – whether they are actually on board or not – before they talk to VCs.
Ralph Eric Kunz of Catagonia Capital was at great pains to point out that the best possible investment would be not to take any investment money at all: “I have the feeling that many of you think of it [investment] as an end by itself; it’s only a means to an end. It can be a useful instrument, but there are others.”
You need to make sure you get your timing right – it can, after all, make perfect sense to take the VC money at the right time, if it pushes you company along.
Bo Ilsoe of Nokia Growth Partners described some of the topsy turvy history of Nokia, and said the current climate makes it a very scary time to be an investor, but also a very interesting one – there are great chances of exiting at a good price, but it is actually very expensive to invest. Part of that, he added, was that today, one of the secrets is that there are no secrets.
Kurt Muller of Target Partners at Capital On Stage 2014. Photo: Silicon Allee/David Knight
Deep Pockets and Short Arms
Kurt Muller of Target Partners noted that it was very healthy for a VC to get up once in a while to justify themselves to their ‘customers’, i.e. the entrepreneurs they invest in. Kurt, a seasoned founder and investor, used an old joke to describe the definition of a VC: A man with very deep pockets and very short arms. But while they are very picky, entrepreneurs need to be equally so.
In particular, they need to look not only at the potential working relationship, but at the individual business models of different VC companies: Geographical area, maturity stage, whether – like Target – they are in it for the long haul and essentially want to buy low and sell high, or whether, perhaps like a corporate investor, they might want to buy the company themselves at some point.
Alexander Reichhuber told the attendees that the name of his investment firm, Berlin Technologie Stiftung, reflected their belief in the European scene. He revealed how an Israeli once told him that nobody has posters of European entrepreneurs on their walls, but rather those of Silicon Valley – and that was something Alexander wanted to change.
His take on investment was interesting as well – the Holding part of the name indicates that they invest their own money as well as that of others, and in fact, Alexander himself works two days a week in two of their portfolio companies.
Owning You Category
As well as the VCs themselves, Nadahl Shocair – CEO and publisher of Silicon Allee and a business transformation expert – gave a keynote on how founders who have secured funding for their companies can then strap a rocket to their backs.
He outlined nine action areas, starting with ensuring you have the best people around you, and also including positioning yourself in a market category and associating your brand with it – owning that category, as McDonalds owns burgers.
In all, it was a highly interesting day, and that was without the networking – there were so many investors in attendance, it was like being a kid in a candy shop for the founders. Or, as Shmuel Shafets of Hasso Plattner Ventures put it, all the attention on the investors made them feel like a pretty girl – but all the founders wanted was to get into their wallets…