Looking for investors? Read advice from the experts
Three investors from three different firms offer points of advice for founders to secure their first invetsment.
While the 2024 AgLaunch Cultivate Appalachia Bootcamp may have ended, much of the thought-provoking information still lingers. No doubt, the highly anticipated financing panel left some of the participants wondering if venture capital is the right avenue for their start-up.
Ken Woody with Innova Memphis, Grady Vanderhoofven with Three Roots Capital, and Pete Nelson with AgLaunch sat on the panel, each from the perspective of being investors and running venture capital firms.
What matters most – the technology or the team?
“The value of technology continues to go down, as it becomes more accessible to people; whereas, the value of a strong founder has, and continues to go up,” Nelson said.
Woody added “The first thing we look at as investors is the technology – is it viable? Is it feasible? Is it scalable? Then, we evaluate the strength of your team, and that’s what helps us make the decision one way or another.”
They explained how often the business model, product, service, or customer base may shift after taking an investment. Investors are more likely to gravitate toward a founder that is adaptable, and willing to change. As Vanderhoofven put it, a great founder can pivot and still succeed.
The panel also explained the relationship that develops between an investor and a founder. It’s not a friendship, it’s a partnership, it’s a marriage. So, founders should be just as selective when it comes to finding the right investor, as investors are in finding the right founders.
What can first-time founders expect from a meeting with an investor?
“If you entice us with an email sharing just enough information about your idea, and we accept a meeting, be prepared to share your goals for the next six months,” Vanderhoofven said. “If we are interested, we will check back in six months later to hear if those goals were accomplished.”
The purpose of this is to test if the founder can set and accomplish reasonable goals on the timeline they lay out.
Woody shared that six months would be considered a fast timeline for securing an investment from start to finish. Sometimes it can take years.
“A tip I would give to first-time founders is to also look at the portfolio of the investor, is it a promising portfolio?” Nelson said. “If all their other portfolio companies fail, then they’re going to place a lot of pressure on you.”
That’s why Vanderhoofven said you shouldn’t just seek out investors for cash flow.
“You need to seek out an investor that can provide value to your company beyond the check,” he said.
To read more about the companies in the 2024 AgLaunch Cultivate Appalachia Cohort, click here.
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