Dive into Startups.be overview of the fundraising process, prepared by Thibau Claes (thibaut@startups.be). Learn more and get investor-ready: www.startups.be/fundraising

1. Startup fundraising process
Thibaut Claes
thibaut@startups.be

2. Agenda
• First remarks
• Process
• Timeline (average)
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3. Reviewed by
Patrick Polak
Partner
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Marc Fournier
Partner

4. First remarks
• Each investor can have a different process
• Angels could make decisions faster than VCs
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5. Process
1. Have an introduction
2. First meeting (with an analyst / associate)
3. Second meeting (with analyst & partner)
4. Third – and further meetings
5. Term sheet
6. Due diligence
7. Closing
8. Preparation is key
9. 6-12 months process
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6. Process (average) – 1% success rate from 1st meeting
1000 startups send an email to a VC fund
250 got a 1st meeting (25%)
75 got a 2nd meeting (25-30%)
45 go from 3rd to 5th meeting
10 pitch to Investment Comitee (<20%)
7 got a Term Sheet (70%)
5 go to Due Diligence (70%)
3 close (60%)
• If you pitch an angel, you have better meetings’ rate and
more chances to close
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7. Have an introduction
• Investors receive a lot of solicitations (1.000-5.000 startups
/year)
• Only 20-25% of the startups that send an e-mail get a
meeting
• Best way to get into an investor’s office is to be introduced by
someone who knows both of you (mutual connection) and
that investor trusts (portfolio company, co-investor, lawyer,
broker,…)
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8. 1st meeting
• « The goal of a 1st meeting is to have a 2nd one, not to
receive a check »
• You will probably first meet with an associate/analyst who is
the « filter » for the partners
• Get him/her excited/interested or at least willing to study your
startup further
• (S)he should have the feeling that you have something or the
FOMO feeling
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9. 1st meeting
• Don’t go deep in the details. Give an helicopter view of :
• Team
• Market/competition
• Product
• Traction
• Roadmap and plan
• It should be more a conversation than a « presentation »
• Shouldn’t be more than 1 hour, idealy 45 minutes
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10. 1st meeting
Founder’s tips
• If the investor doesn’t know the sector/market that much,
educate him/her. Most of the time (s)he doesn’t, then take
time to explain it concretely. If (s)he doesn’t get it, (s)he will
skip the deal
• Be credible and trustworthy. Show ambition and knowledge
• Don’t try to make the deal now
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11. To go to 2nd meeting
• To know if you could got a 2nd meeting, check the investor’s
reaction in the next 24h after 1st meeting
• Looked your Linkedin profile
• Gave a call/ sent mail
• A retweet,…
• You should have a go / no go for a second meeting in the
next 7-10 days MAX
• Otherwise, send an email but be sure at 98% that it’s dead
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12. 2nd meeting
• Second meeting will be with a partner and the
analyst/associate you already met with
• Even if associate already explained what you do, best is to
explain the basics again
• Follow the same schema as the first meeting
• Partners have more experience then could ask more precise
questions that way you will go deeper in the business
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13. 2nd meeting
• Goal of the second meeting is to have the interest of a senior
manager in the fund and to start to go deeper in the business
• Investors will ask for more detailed questions about metrics
in order to reinforce their interest
• If they don’t see major objections (competition, market, low
growth, non-convincing answers to key elements) you should
go and go to the second part of the process (meetings #3
and further)
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14. 3rd meeting and further
• From this moment, you have the interest of an
associate/analyst and a partner
• Your « case » was discussed two times (at least) during the
« Partners meeting »
Note : « Partners meeting » is the weekly meeting when/where
all the members of the VC fund gather in order to discuss all
the startups that are in their pipeline to know if they go further
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15. 3rd meeting and further
• Investors will look deeply at your business and will more
prepare the meetings
• Before the meeting(s), you will probably need to send
• Detailed financial projections
• Detailed metrics and KPI’s
• Reference from your customers, your providers
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16. 3rd meeting and further
• Before the meeting(s), they will
• Call your current customers to know what they think about you
• Have more reference calls with current/potential investors
• Look at your financial projections and check if it makes sense
• Check what your metrics look like, how you calculate it,…
• They will analyze your product (can be part of due diligence)
• Ask CTO’s from portfolio company (or others) to look at the
code
• Ask customers about what they think about it
• Test scalability and sustainability of product
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17. 3rd meeting and further
• Before the meeting(s), they will analyze the market
• They will read reports on it
• Interview their network about it, know the trends
• Before the meeting(s), they will carefuly analyze competition
• What’s their market shares?
• Who are they?
• How can you concretely beat them?
• Sometimes, call them anonymously to have info
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18. 3rd meeting and further
• They will at least once come into your office
• To understand the atmosphere in the office
• To look how the people work
• To check if people stay late in the evening
• Interview your team and check the background of key people
(with reference calls)
• Be prepared to be challenged on each point mentioned
previously (plus the ones from our other presentations) and to
give accurated and convincing answers if they have doubts
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19. Investment comitee
• After weeks of meetings and discussions the partner is
convinced by your company
• You need to convince the whole team because to make a
deal you need the approval of the all the partners
• New objections will come because
• Other partners don’t know you and your startup
• Other partners have other concerns
• All partners are not equal and some’s choices are more questioned
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20. Investment comitee
• This pitch can be short (1h30) or longer because it’s normaly
the last « big test »
• It’s the last time the biggest concerns can come
• It’s more difficult because you have multiple points of view
and need to adress all
• Idealy, the partner and associate you already know briefed
you a bit on how to behave. They want the deal to be done
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21. Term Sheet Proposal & Negociation
• You convinced all the investment comitee, they are now
willing to invest in your company
• The lead investor will propose a Term Sheet to you in order to
sum up the clauses and conditions of the investment
• Take your time to discuss it, you will need to negociate it
• Don’t accept every clause but don’t « fight » for all clauses
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22. Term Sheet Proposal & Negociation
• It’s a hard period because you are alone again
• Ideally you need a lawyer to help you in the negociation
• Don’t take too long to discuss it. Idealy you should have one
or two discussions about it
• Negociate by phone or face to face, confirm the negociation
by mail just after
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23. Due Diligence
• When you have signed the Term Sheet (pre- shareholder
agreement) you still have work to do
• Investors want to have the last checks to be sure that the
startup, they are investing in, is clean
• Some investors do that before proposing a Term Sheet,
others after
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24. Due Diligence
• With lawyers, investors will look at
• Employees contracts (salary, IP given to company, nonc-
competitive agreement,…)
• Freelancers contracts
• IP rights (if any)
• Commercial contracts you have signed with partners
• Cleaness of cap table
• With auditors, investors will look at
• Actual/current financial situation of the company
• Accounts of the company (different kind of debts,…)
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25. Closing
• Once everything is ok, you will sign the shareholders’
agreement
• It’s a contract, similar to the term sheet but being binding (it’s
a real contract, not a letter of intent)
• Once the agreement is signed, you can expect money on
your bank account 1 month after
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26. Preparation
• Before to start your roadshow, prepare
• Your slide deck
• One pager
• Introduction mail to investor
• Your metrics
• The terms that you would like to have in your Term Sheet
• During the roadshow and after the first meetings, prepare
• Employees’ / freelance / sales / partnerships’ contracts
• Other legal documents
• Patents (if needed)
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27. Timeline (average)
• Preparation -> 2-6 weeks
• Roadshow (meeting with multiple investors and got 1-3 term
sheets) -> 3-6 months
• Term sheet negociation -> 2 weeks
• Due Diligence -> 2-4 weeks
• Closing -> 4-8 weeks
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28. Any question(s)?
28
Thibaut Claes
thibaut@startups.be
@thibclaes

29. Appendix
• If you contact 30 funds or investors
• 7 will be too busy at that moment
• 8 can’t invest because out of investment thesis or competiting
startup in portfolio
• 15 will be open to discussion
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30. Appednix
• When to NOT contact them
• They are off
• You have contacted them in the last
6 months and they were not interested
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