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The VC Playbook: Tips for Approaching Investors

Tips for Founders from Practica Capital

Hello founders! For the last 10 years, we have been investing in tech potential in the Baltic states, and we have been lucky to partner with some of the global success stories from the region. Over those years, we received thousands of pitches and met with hundreds of founders. Of course, for entrepreneurs, raising capital is a crucial aspect of building and growing a business. However, approaching investors can be a daunting task. It's important to understand the investor's perspective and tailor your approach to increase your chances of success. Here are some tips how to navigate this process:

Do your research

Before approaching an investor, you should do your homework. Research potential investors to see if they invest in your industry, stage, and geography. Look for investors who have invested in companies similar to yours, and read up on their investment criteria and process. It will help you understand whether or not the investor is a good fit for your company, and it will also help you tailor your pitch to their specific interests and preferences.

Have a clear and compelling pitch

When you're ready to approach an investor, be sure to have a clear and compelling pitch that outlines your vision, value proposition, market opportunity, and team. Your pitch should be concise and well-articulated, and it should clearly communicate what makes your company unique and why it has the potential to be successful. Show traction and avoid unrealistic expectations!

Be prepared for due diligence

Once you've caught an investor's interest, they will likely want to conduct due diligence on your company. This may involve reviewing financial statements, product plans, customer data, and other important information. Be prepared to provide all the information an investor might need to make a decision and be transparent about any potential risks or challenges your company might face.

Be open to feedback and guidance

Investors often have a wealth of knowledge and experience that can be valuable to startups. Be open to feedback and guidance, and be willing to adapt your strategy and approach based on their input. This will help you build a stronger relationship with your investor, and it will also help you improve your chances of success.

Be patient

The fundraising process can be a lengthy one, and it's important to be patient. Don't get discouraged if you don't receive funding right away, and don't be afraid to follow up with investors periodically to keep them informed of your progress. For example, we tend to build our relationships with founders from the super-early stage and are willing to dedicate more time and resources to the process if necessary.

In conclusion, investors look for various factors when evaluating investment opportunities. In our operations, close attention is paid to the fundamentals, with the founder at the very centre. With our generalist approach, less emphasis is put on vertical, and more on market size and opportunity. Domain expertise is also a must - founders are expected to have a cohesive understanding of the industry they’re targeting, their role in it, and how their startup will create value. A detailed understanding of how VC funding will contribute to reaching your goals is essential too. Of course, if you are a first-time founder, you cannot be an expert in everything - there's a steep learning curve. But with persistence and perseverance, you can find the right investor to help take your startup to the next level.

And the last tip - build relationships!

Investors are more likely to invest in companies they know and trust. Take the time to build relationships with potential investors, even if they are not ready to invest in your company yet. Attend networking events, reach out to investors, and try to connect with them in person. TechChill is a great place for that - let's connect and meet in person in Riga!

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