03. April 2018
Interview: How we looked for an investment for SENS
In two months, they managed to reach out to almost all the Czech angel investors and seed funds. They were busy, running from one meeting to another. Results? Four offers from investors. In the below interview with SENS co-founder Daniel Vach you will find out what helped startup SENS get investment from UP21.
Is it difficult to get an investment today?
I think there were worse times. It's not bad, but it's still not easy. It's a full-time job for some time.
At what stage did you look for an investment?
It was an interesting time in which we were trying to arrange a large-scale production and at the same time find a big investor who would pay for it. We launched a Kickstarter campaign in which we collected several hundred thousand Czech crowns. It was a proof that people are interested in our startup. We also knew that we needed significantly more money than we got. At that time, we also had a good business plan from one competition, so I would say we were quite well-prepared.
How did searching for an investor go?
We made a thorough research of Czech angel investors and seed funds and we contacted almost all of them. We tried to communicate with as many people as possible and had many meetings. We got the first offer after a month and in two months, we closed the deal with UP21. In the meantime, some investors contacted us because they read about us in the media.
What followed after you presented your idea?
If the idea made sense to both parties, more meetings followed where we discussed the investment. We asked about all the details and asked for time to consider the pluses and minuses. It is said that it takes about 3-6 months to sign the contract from the time you tell yourself you want an investment. But it can take much longer. I think two months were quite unusual.
What helped you get the money?
I think investors liked our traction from Kickstarter and also the fact that Radek and I had already been doing business together before and successfully exited one company. Even though we were optimistic, our business model was realistic and it was clear where we wanted to go. It was obvious that we wanted to expand abroad and that we had a global vision.
Did you have any interesting experience with an investor?
I was in a meeting where the investor was challenging us extremely, which is always useful because it forces you to think about what you do. Once we were in a meeting in a seed fund where they asked us if we were willing to have liability for the investment. We refused the fund immediately because such guarantees do not belong into the world of startups. Startups by their nature are risky. Either they bring a lot of money or nothing. If the investor gets the profit, the entrepreneurs cannot sign a deal and if it does not work out, pay off debts for the next ten years.
How did you choose your current investor?
We were in a very unusual situation. We could choose from four investors – three angel investors and one seed fund. Finally, we chose UP21, which offered us smart money. We liked the fact that we would not only get money, but also a supporting infrastructure with it.
Can you explain what smart money means?
It's an investment that includes education, mentoring, and services (offices, accounting, software development) besides money. You get the chance to work in an environment where you can concentrate on your work, gain access to a wide network of contacts and get support from experienced people. Smart money means you spend money in a smarter way.
Can you, in the end, give advice to people looking for an investment?
- Make a list of all potential investors and reach out to them.
- Book at least 2-3 months of time for the search.
- Do not necessarily accept the first offer. Take time to think.
- Do not just look for money but want smart money.
- I would certainly recommend people to prepare a good pitch deck, a business plan and a financial plan. From their presentation, the idea of their business – what, why, and how they want to do it – should be clear. It is also nice to take part in a few competitions and hone your elevator pitch.
Thanks for the interview.