Raising capital for a new venture can be quite daunting at this time when a global crisis has affected many lives, including businesses, markets and economies. The present situation may be quite disheartening for those who want to take their first step into their entrepreneurial journey or those with businesses who want to open a startup.
However, there may be a spark of hope as CloudOlive Co-Founder and Co-CEO Adam Ross shared, through a virtual event with EO Melbourne, his valuable experience and the lessons he learned from launching a Venture Capital-backed startup during a pandemic. Adam is now pitching for round 2 of raising capital, using the lessons he learned from round 1.
It all started when Adam received from a friend a link to Antler, a global early-stage venture capitalist (VC) that enables and invests in the world’s most exceptional people, defining companies of tomorrow. Through this startup incubator, Adam met his co-founder earlier this year, and they both founded CloudOlive, a single place for Managed Service Providers (MSPs) to discover, purchase and optimise the SaaS solutions they resell to their customers. Since incorporating in April, they have raised funds for capital and are in the process of launching a minimal viable product to pilot customers.
To participate in this funding process, Adam and other accepted applicants went through a 12-week program and training wherein they would find a co-founder, validate a problem area, get as much traction as possible, and have an opportunity to pitch to possible investors. What they usually look for in founders, as Adam noted, are technically-minded people, those with a commercial mind, and the main experts. These qualities and the ability to execute ideas are often chosen during the process.
One of the key factors for a successful pitch is good preparation. Adam and his co-founder had to come up with hundreds of possible questions before the pitch to ensure that they have diligent answers to everything that will be asked of them. They assigned topic questions to each other so that it will be easier to respond to queries during the pitch. It is also best to keep those answers short and concise.
Throughout the experience, Adam realised that raising money is a full-time job. He found that trying to close in the first call is never going to happen. For most VCs, what they care about is future traction. “Securing a VC is almost like securing a user for your product in some regard. They need to fit the exact intersection of where you are and what you’re offering,” he stated.
From the first phase of the program and going into round 2, Adam learned that it is better to ask diligent questions to investors early on. Such questions can be:
Talk us through your last 3-4 investments.
How long did they take to come about?
What revenues were they at?
What’s your follow-on strategy?
If you invest in us now, how hands-on do you want to be in the business?
It is good to speak to their portfolio companies as well to be able to gain an understanding of what they are like when things are not doing well. Adam believes it is important to have this information because having a VC is like a marriage where both the founders and the investors have to make the partnership work and enjoy the returns.
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EO Melbourne organizes learning events like this where Members and those within the EO community can find nuggets of information, knowledge and wisdom that can help them in their entrepreneurial journey. EO Members also join lots of benefits that can further their development as entrepreneurs and help them with their businesses. To be part of EO Melbourne, you can check this page on how to join.