There is no magic formula to secure funding from any VC, let alone one that is not in your home country. It’s almost like finding a relationship – if you’re lucky, you will find the partner of your dreams, but there’s going to be a lot of due diligence before you commit to anything serious.
I met with a partner of one of the most successful European funds the other day and presented Israeli start ups that look interesting at the moment. In our conversation, I gained some insight as to what VCs are looking for when investing in Israeli companies. Here are a some of my notes:
1. Have a partner on the ground that they can trust –most likely, it will be your angel investor. Make sure you pick Angels that are tightly connected with VCs abroad, if you are looking for that kind of exposure.
2. Try to automate the sales cylce –if your market is the US or Europe and you are physically sitting in Tel Aviv, chances are that you will miss a lot of potential revenue. VCs want to know that you can make money around the clock, regardless of your ability to set up a meeting.
3. Define your target market – who is your customer? Where does he currently hang out? How are you going to meet the market. A solid penetration strategy and partnerships with other companies are going to reduce the risk for an international investor.
4. Show revenues– the numbers in the business plan are based on assumptions that most likely will never be met. There’s obviously exceptions to this rule, i.e. Twitter’s $230 million valuation with no revenues whatsoever. That said, if you’re banking on advertising dollars, demonstrating revenues will improve your chances to get a higher valuation.
5. Come with a prototype –the days of investing in ideas are gone. Hell, even seed investment is disappearing. Bootstrap as much as you can before you talk to the VC. In the product itself, less is more. Demonstrate how you are creating value and come up with an exit strategy. Who is likely to buy you if you succeed and why?
Good luck with your funding quest.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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