We’re excited to announce that in the middle of July our CFO, Piotr Korzeniowski, visited Google’s Wrocław Office to pair up with Google in their educating efforts. The occasion was the Google Startup Lab – an initiative to introduce wannabe techpreneurs to the arcana of starting and developing an IT business.
Piotr shared Piwik PRO’s story of looking for investors. He talked about what he learned along the way and what pitfalls anyone who sets off on such a journey should avoid. He also familiarized the future startup founders with the investors’ perspective.
Here are some insights from the talk:
- It’s easier to pitch an entity that delivers value. Hence, if you have a choice, pitch a product company rather than a software house.
- Initially, brace yourself for the time when, instead of bringing profit, you’ll be investing heavily in development and in marketing.
- Potential investors will naturally look into your books. If they notice your payroll spending is higher than the spending on marketing or product development, it’ll be a sure sign for them that in fact you’re an agency rather than a product company. What does it mean for you? Know who you are and present yourself as such!
- Don’t let the lack of or minimal revenue deter you from looking for investment. This is the very reason why you need one, in the end. The ability to prove you have customers should be enough to make the investors listen to you and want to get to know you better. If your idea is right, even one monthly subscription may suffice. Give it a go!
- When you’re only about to start pitching, start with the venture capital firms you’re not interested in cooperation with. Give yourself some time for honing the pitch first.
- Make sure you know your company. Know the numbers! If you’re going to pitch on the phone, you’re going to have only limited time to grab their attention. Be prepared!
- Pitch wisely. No investor wants to hear what other company on the market you’re similar to. Get rid of the bias. Instead, convince them from the ground up, saying what problem you solve and why it matters. Only then you’ll be ready to move on to the valuation stage. Never start with saying how much you’re worth. Chances are that doing so you’ll only make the potential investors sceptical.
- Once you have a venture capitalist interested in your project, do the background check! Check what companies they’ve invested in. If you find out they invest in a business similar to yours, back off! In the future one of the businesses will not only be redundant, it’ll be a problem they need to get rid off.
- When it comes to negotiating the deal, make sure you don’t give away too much power over your project. Most importantly, secure yourself voting rights so that you don’t lose control over the future of your business.
- Before you close the deal, you’ll have to have an audit performed. It shouldn’t come as a surprise that the bills for such audits are astronomus. If you research the subject on the internet, you’ll learn that paying for the audit is on your side. The truth is, however, there’s no consensus as to whose responsibility it is. Negotiate it!
Thanks, Google, for the invite. We’re glad we could pitch in. And, most of all, best of luck for all the talented people who take part in the project, including our Python Developer, Bartłomiej Kurzeja. Good luck, Bartek! We’re all rooting for you!