Let’s be honest – one of the most essential factors in securing your company’s growth is to have sufficient funds that allow you to continue your business processes. But raising funds is not always easy, knocking on countless doors and pitching to curious minds that question every step of your way can often be time-consuming, exhausting, and sometimes de-motivational. That said, if you have a brilliant idea that can solve a pre-existing issue in the market, it is always a head-turner for angel investors, venture capitalists, and investment firms.
And since we at Occtoo just closed a €4.6M funding round, I wanted to share some key takeaways and numbers that can support other founders in fundraising.
Let’s start with some numbers!
- We pitched to 54 Investors for this round, some new and some old. Approach all parties, be they new or old, with a similar mindset that proves to them why they should invest or continue to invest in your business. As daunting as it sounds, you need to brace yourself for every round of pitching with patience and persistence. Every single meeting matters!
- 42 said ‘No’ after the initial call, and that is the harsh reality of it that you need to be prepared for! Not everyone will see the ‘value’ in your ‘proposition’ and that’s okay, you need to continue this uphill battle!
- After we completed our initial round of first meetings, we then proceeded to 26 second-time round meetings with remaining investors, consider this as half battle won but focus on the other ‘half’. We boiled down to 10 third-time round meetings after this round with a short list of investors. 3 Term sheets were made during the entire process to ensure that we create a win-win situation for both the investors and Occtoo. This is an essential step of the process that demands scrutiny. Get your nose in the books and go through every little detail!
Don’t let constant back and forth from all the pitching rounds dampen your spirit, remember that you are in the ‘fund-securing’ game and that you are in it for a long haul! So don’t let it wear you out, move tactically with perseverance, and eventually, you will hit the bull’s eye.
Finally, we received about 60 emails from our legal counsel during the closing phase to tie all the loose ends together but luckily, on our end, we had a great team that pulled all of this together very swiftly and you will need such support too!
Now to the details!
We started having our first meetings as early in the year as March and were successful in scheduling a couple of meetings every week, but the cadence dropped as we approached summer with lesser activity during May and the end of June. For us, it was evident that the market activity was slower during summer i.e. Q2 as many venture capitalists at that time were occupied with portfolio management, focusing much of their attention on their existing company and shares. Our silver lining came in August when we successfully (and finally!) negotiated our term sheet and decided to proceed with Newion. I must say we had some really good alternatives but our investors, John Sjölander and Tea Elezi made a compelling case for Newion in the process. Again, pay attention to who you choose to work with and the compatibility between you and the investor.
The due diligence related to the Technical, Financial, Legal, and People aspects of the company was conducted in September and the formal decision (investment committee for some funds) to go ahead with the investment was made in mid-October.
With the support from both parties’ legal councils, we closed the entire round in a brief time. The final agreements were signed in November.
And as I write this, all the money is now safely in our account. (*BIG SMILE*)
So now you know the story up, close, and personal. However, if I had to highlight just two points from my journey of securing funding for Occtoo, I would conclude those to be as follows:
- Decide on what kind of investor you want to work with – Know who can bring you the best value as you can to them! For Occtoo, it was experience within B2B SaaS and European focus/network.
- Make sure you talk to investors that invest in the phase you are currently in and the space you operate within – Ask them about their current investments, their investment thesis, and ARR levels. That will give you an indication if you are a fit or not.
Lastly, practice your pitch and try to pitch from an angle the VCs have invested in. Be completely aligned with the growth journey you envision for your startup business and have a constructive dialogue, that’s also a fantastic way to get to know each other.
Also, do not forget to work with legal councils that focus on the critical parts of the agreements, and DO NOT get stuck in Legal cockfighting!
Now that you have covered the ground, go get your funding, and good luck with your fundraise!