This guest post is written by Tom New, Co-founder & Marketing Director of Formisimo – whose checkout/form analytics and reaction engine helps their users collect and analyse data on why their customers don’t complete the online buying process. Tom joined Seedcamp for the twice-yearly US Trip, meeting investors and tech companies across the USA.
We recently finished Seedcamp’s US Trip. It truly was a whirlwind two weeks, and one that we enjoyed and learnt a huge amount from. I could write a list of 100 things, but here are three…
1. They said the US VCs think big. They really do.
We were told by Seedcamp and others that US Venture Capitalists are most interested in large, far-reaching problems and that can be solved by startups. BIG problems, with a huge potential market. They were not exaggerating.
It speaks volumes that in our time meeting investors and VCs in the UK, so rarely did anyone mention the word Unicorn (billion dollar start ups). Given the amount of capital available in the US, it is unsurprising that many VCs almost solely look for the next Unicorns (if you want a good explaining of why, this TechCrunch article is great).
Even if they aren’t exclusively looking for billion-dollar start ups, almost all of the VCs we met wanted to think about how your idea could be worth at least $500 million. Anything less simply isn’t interesting for them.
Smaller ideas and products aren’t necessarily uninteresting (objectively speaking) – it’s just that startups will find it tough to receive US investment if their aim is to be build a $30 million-dollar business.
That doesn’t mean that you have to completely rethink your startup if your initial offering framed it as a smaller, profitable business; it may just be a case of extrapolating from your initial product, taking a step back and thinking about the broader issue that you are trying to address.
For us at Formisimo, that shifted our pitch away from ‘just’ making forms and checkouts better, to a broader vision about removing friction at the point that a user has to provide personal information at that point of a customer journey. When we thought of it that way, our potential future products and scope were much larger, and that was reflected in the interest of the VCs we met.
2. If you keep using the same deck after lots of passes from VCs, your deck could be wrong, not your product.
There are a number of reasons why a VC might pass on your startup; it might be outside the markets that they focus on, the maturity of the company might be wrong, or any other number of reasons.
However, a surefire way of giving yourself the best possible chance of investment is to listen carefully to the feedback in these meetings. If similar points and potential pitfalls keep coming up, you can address these in your pitch before they come about.
This does two things:
- It shows investors that you have thought about the potential limitations of your start up and have addressed them in advance – always a good way to show them the team has some good business brains behind it.
- It allows them to ask more interesting and in-depth questions about your business, as you have already covered the initial ones. When your time is limited, this is vital.
We used six different versions of our deck throughout the two-week Seedcamp trip, constantly tweaking the content and our pitch. At the end of it, I would be confident in saying it is the best it’s ever been.
3. Most other startups have faced the same challenges as you. You can learn as much from them as you do VCs.
Obviously, the Seedcamp trip is a whirlwind of meeting some of the East- and West coast’s biggest and best VCs. On our own, it would be impossible to arrange a trip to the US and meet so many.
However, as with the Seedcamp week, we learnt a huge amount of practical tips from the other startups on the trip. This is an incredibly valuable experience, and one that reminds you that many, many others have the same conversations that you and your co-founders do.
From how to deal with the nightmare of VAT if you are using Stripe to sell internationally (thanks Satago), sales strategy and qualifying leads (thanks Minubo) to different approaches to prioritising product development (thanks everyone!), we took a lot of actionable, practical tips with us from this trip.
The organised chaos of building a company is one that all the teams are going through – many of them for the first time. Many of the choices and challenges are the same, and it is incredibly valuable to be able to speak to your peers openly and honestly.
Our residual feelings of the trip were overwhelmingly positive. Ricardo from Seedcamp did a pretty incredible job of organising the trip and Carlos and Reshma have opened doors that we couldn’t have dreamed of opening on our own at this stage of our business. We’re still digesting some of it, but if and when it comes to raising money from the States, we’ll be in a much stronger position than we were before.