Demystifying Deal Flow: Is your team coachable and ready to take feedback?
By our member FiBAN (originally published here)
What can startups learn from applying for seed funding? In this article we continue discovering the learnings from our last article “5 tips for getting an angel investor onboard”, where we shared the lessons from the last batch of startups that applied for seed and pre-seed funding through the Finnish Business Angels Network.
These findings are based on our previous screening session, where FiBAN evaluated 84 startup applications. On average, 9 angel investors take part in evaluating dozens of startup applications on each screening board.The screening board members base their decisions typically on long industry experience as entrepreneurs and/or angel investors as well as their personal interests.But what were the core reasons why this time startup funding applications were rejected? Let’s find out.As many as 79% of startups neglected their go-to-market strategyCompared to the previous batch, even a larger share of startups forgot to think about their Go-to-market strategy after the Christmas break. The number of startups neglecting this grew from 60% to as high as 79%. Luckily, it is not all downhill as there was an improvement with other evaluation criteria, such as startup teams.
79% had an unclear go-to-market strategy
This still remains the most common reason why startups get rejected by angel investors! A startup’s growth engine should be defined whether it’s sales-led, product-led, or other. It should also include how a startup is planning to take over the chosen market.
60% has too high a valuation compared to the stage of the company
Valuation being too high together with capital seeking makes the angel investors wonder if this is investable. A valuation too high also means higher expectations for traction from investors. There will be negotiations about the valuation during investment conversations, but it still should be in the correct range to make it this far.
58% of startups had their competitor analysis unclear or unrealistic
Competitor analysis should always be included but it should also be credible. There is always some type of competition for every startup!
50% had their competitive advantage unclear
The application should make it clear what gives the startup a unique advantage over those trying to compete with a similar solution. Try to think of your competitive advantage from the buyer’s perspective: why would they choose your product over the competition?
48% had estimated their market size unclearly
It is important to evaluate the potential of the market and it should be concise about the specific market you are targeting, not the whole market in the world. Let’s say that very rarely a startup can directly jump from early revenue to worldwide scaling. You need to explain what happens in between before you get there.
In order to get started in this you can use TOM (Total Addressable Market), SAM (Serviceable Addressable Market), and SOM (Serviceable Obtainable Market) together with future growth estimates for the markets.
The positive side: great teams that improve through feedback
On a positive note, there were also pleasant findings in this new batch. The accepted teams who got through screenings all the way to FiBAN’s Pitch Finland had good coachable teams that have what it takes to grow their companies. They also stood out by constantly improving their deck and application, and with their ability to take feedback.
Even when it hurts, learning to take feedback is important and it’s an inevitable part of entrepreneurship, as feedback eventually either comes from customers, the board, or investors.
If you’re unsure what your pitch deck or application should include, the FiBAN team has just compiled this free startup checklist for applying for angel funding.
Is your startup ready for investment?
Do you have the above-mentioned in order? Apply for seed and pre-seed funding here. Read more about FiBAN’s deal flow process.
Join a screening session?
FiBAN Member – would you like to join the FiBAN Investor Screening Board? Register for the next screening board here.
More information:
Topi Laakso
Deal Flow Manager
topi@fiban.org
Finnish Business Angels Network (FiBAN) has appointed a new CEO, Tiina Laisi-Puheloinen, who’s not afraid to be a pioneer and drives a vintage Beetle she purchased “at a price of a Cognac bottle.”
In May, Tiina Laisi-Puheloinen will step into the shoes of the CEO of FiBAN, the largest angel investor network in Europe. She saw the opportunity at FiBAN to develop the startup field and make the role of angel investors more visible in society. “Angels play a key role in the growth of startups before they receive follow-on funding, and it is a prerequisite for the survival of many startups,” she says.
Visionary thinking and professionalism
Tiina Laisi-Puheloinen describes herself as positive and energetic, which fits well in the startup field. “I have lived and breathed the startup world and seen first-hand how to look for funding. When the position of CEO of FiBAN came up, I thought I could have something to contribute to that role. Angel investing in your homeland is a patriotic act,” she adds.
Laisi-Puheloinen’s understanding of the startup field, strong expertise, and visionary thinking also impressed the FiBAN board.
“In the recruitment process, we were looking for a candidate who would bring new perspectives to the development of FiBAN. We were fortunate to have several high-quality applicants apply. We decided to go with a person with essential experience as a startup entrepreneur and strong leadership skills. Additionally, she had excellent credentials as a supervisor,” chair of the board Kim Väisänen and board member Eljas Repo say.
From the Finnish Defense Forces to leadership and startup pitching
Laisi-Puheloinen has bravely taken new turns in her career. Previously, she worked in the Finnish Defense Forces and held leadership positions in several well-known Finnish companies. “I began my career in the defense forces and moved to the commercial side in 2005. My career path took me from leading Monster and Sanoma Digital‘s business and various other digital businesses, all the way to international leadership positions in the furniture company Isku, until my path led me to the startup company Priceff,” she continues.
She was supposed to join Priceff “just to help a little bit for a short time.”
Five years later, she realized that the startup world had taken over, and her path merged with FiBAN’s. “Suddenly, I was a shareholder and chairman of the board of Priceff, and in the next turn, I was pitching to FiBAN investors as CEO. Two of Priceff’s investors were found through FiBAN,” she describes.
Perspectives from the entrepreneur background: “Everyone should try startup entrepreneurship”
Laisi-Puheloinen has extensive experience in multiple types of startup roles. Working in a startup requires an unwavering attitude and versatile skills, she states: “In a small company, you have to be able to do everything,” she says.
“I claim that startup entrepreneurship is the toughest game in the world. Those who think that startups make money easily should try starting from scratch. It would be good for everyone to try startup entrepreneurship sometime to learn what it takes to make money. It’s far from lazing around,” she points out.
She describes her core values as openness, honesty, and positivity. When she’s not hunting or exercising in her free time, she spends her summers cruising around with her red 1972 Beetle, the same car she learned to drive with.
“I bought the Beetle from my father for the price of a bottle of cognac. I have since restored it, and it certainly wasn’t a financially sound investment. But some investments are best when made without thinking of the cost too much,” she says.
More information:
Milja Inkeri Mäkelä
Communications Manager, FiBAN ry
+ 358 40 538 5418
Tiina Laisi-Puheloinen
CEO, Finnish Business Angels Network (Starting on May 1st, 2023)
Finnish Business Angels Network (FiBAN)
The Finnish Business Angels Network (FiBAN) is a nonprofit association of angel investors that has 670 members from more than 20 nationalities. FiBAN matches private capital with start-ups seeking funding and educates angel investors at all stages of the investor journey.
FiBAN is one of the largest and most active angel investor associations in Europe. In 2021, FiBAN members invested a total of 52.3 million euros in 626 companies. The data from 2022 will be released on March 28.
