The fundraising process is arduous and expensive, more than what founders expect and often many a times does not culminate into an investment. According to data compiled by Fundable, merely 0.05% percent receive funding from VCs.
Unlike what most European entrepreneurs think, fundraising is not as easy as landing in Silicon Valley and going back in a month or two with a check from Sequoia. In reality, most European founders are left helpless 3-6 months later without a closed deal all because now the investors are asking for more proof of concept. And how can a startup in its initial stage survive if its CEO is jet-setting across the globe raising capital? Such a fundraising process risks the startup losing focus on what is most important: building a great product and company.
If raising money in the US is so hard, what should a European startup do?
While raising a seed round is one thing, without a network, will you be able to effectively raise all the money your startup will need to grow? Everything about the US and San Francisco in particular is about networking. Networking not only comes in handy during the process of growing your company but is pretty conducive to the fundraising process. It is also vital that you practice effective networking. Research what kind of investors invest in companies similar to yours and the industry that you are in. These contacts can help you further on growing a meaningful network. Here are some sites that can help you find investors that are ready to support your startup:
Add filters to further narrow down your search. Filter by investor type (angel investor, early-stage, late-stage VCs, etc.) who have invested in a certain sector and round size.
Practice your pitch
According to Docusend, investors spend fewer than 3 minutes on average viewing a full pitch deck. And asking for funding can make anybody nervous. So it is definitely necessary to practice on a pitch that is to the point.
- Take some time and work on your pitch. Usually, VCs will want to know why they should care about the problem your product/solution is solving and not the technical specifications.
- Find the facts and statistics that truly matter.
- Weed out unnecessary details and practice being concise. Make the most of the short window that investors will be engaged with your deck by omitting anything that isn’t pertinent or clear or that doesn’t serve your narrative.
Read this article for a comprehensive guide on pitching US investors.
Join an accelerator
To get a more guided understanding of fundraising, your best bet as a European founder is to join an accelerator. Doing so will not only help you develop your network but will also present you as a legitimate startup to bigger investors. Participating in a US-based accelerator can help you establish a presence here while enabling you to connect with local investors without the pressure of pursuing one-off fundraising meetings. Such accelerators are adept at identifying emerging talent in international markets and helping them tap into the local startup ecosystem by supporting them in recruiting, building partnerships, and also fundraising.
Simply put, fundraising is a necessary and a sometimes daunting task that most startups must periodically endure. If you are a European-made startup who has ambitions of going global or has started to outgrow the EU and needs help raising funds in the US, we’re here to help.
Watch this webinar to learn more about the best practices for fundraising in the US, as told by our CEO Xavier Wartelle and in-house fundraising expert, Julien Le Drogo.