Caroline Saï has been the European Coordinator for the EIT Health Investor Network for more than three years now and has led many start-ups through the process. She knows: making your start-up visible and gaining investor’s interest is a process that needs effort and time – often more than start-ups are initially aware of.
The EIT Health Investor Network helps connect qualified companies seeking early-stage funding with more than 80 European healthcare investors. The network connects start-ups to venture capitalists, corporate venture funds, family offices, angel networks, and super angels that share the ambition to bring the most innovative ideas to health markets faster.
To help start-ups manage their expectations and set up a realistic plan on how to navigate funding rounds, Caroline is sharing her three most important tips on how to set yourself up for success.
Let us come down from Bubble Gum land and take a proper look at how things are really done in Europe when raising early-stage equity.
I am regularly astounded by young start-ups who contact us (EIT Health Investor Network) for their fundraising and when asked what their timeline to closing is, they answer without doubt or humour “at the end of the month”.
Dilutive funding doesn’t come easy.
The process is tedious, long, and more often than not, you will find investors that have more reason to say no than yes.
So, get ready for a challenging process that can take anywhere from 3 to 12 months.
Know your 5 Ws & H
If you can summarise all your attributes and goals and demonstrate your added value, market fit, and efficacy data, all in a compelling presentation with clear financials then you are set for the next step. It all comes down to knowing your 5 Ws and H: Who, What, When, Where, Why, and How, and dressing it so investors will appreciate you speaking their language: Exits, ROI, valuation, and so on.
Do your Homework
If you are an early-stage start-up raising dilutive funding, you may have to contact Angels Groups, family offices, early-stage venture funds or even corporate venture funds in your own country and most probably beyond borders.
Each will have an investment thesis that may be restrictive regarding:
There is no need to waste your bullets, time, and energy contacting the wrong investors. So be very thorough when doing your homework or get professionals to help you identify the ones you wish to attract to the table.
Let us now suppose you’ve aligned your ducks and are now ready to send out your great deck to the identified investors. What happens next? You wait and hope for an email that will either ask you further questions or invite you to a pitch. That is the best scenario that does not require, two or three reminders just to see if they have received your precious message while you wait in vain.
Let’s be positive and fast forward to your “pitch” tour where said investors are enthusiastic about your project and want to deep dive into all the hidden corners of your company/project/product/market.
The Data Room
Connections are made, networks are activated, and the investigation is ongoing. Prepare your contracts, IPs, your KOL contacts, financial statements, Cap table, certificates, assets, etc. Make it quickly available in an organised, transparent manner that will not only induce trust and professionalism but also speed up this whole Due Diligence process.
Then, according to the amount being raised and the number of investors involved, a lead will come forth, legal advisors will join in and discussions with all interested parties will hopefully lead to a Letter of Intent or Term sheet and finally CASH in your bank.
So, imagine doing all that in 30 days! Not probable.
From my own experience as head of the EIT Health Investor Network, the more you are raising and the more parties are involved, the longer it takes. My advice? Though this is hardly an exact science – plan ahead, get support and expect to add 2/3 months to your initial timeline.
Last but not least, cash is key, don’t be too conservative in your assessment of cash flow needs.
Hail to you, entrepreneur, for your enthusiasm and energy to bring your project to life and to nurture it towards growth.
If you have any feedback or questions, please get in touch at firstname.lastname@example.org
Head of the EIT Health Investor Network