Raising investment for your business can help it succeed, but it can also be immensely tricky.
Knowing how to approach an investor, and pitch in a way that sets you apart from the competition can be tough. With this in mind, we spoke to Spencer Crawley, co-founder and general partner at Firstminute Capital, to get a better idea about what he and his team look for in prospective investment opportunities.
Firstminute is a London-based, pan-European Seed fund, which recently raised $100m. Launched in Summer 2017, the fund is backed by 30 founders of tech unicorns from Europe and the US.
European VC Atomico was its first cornerstone investor, and some of Firstminute’s early UK investments include Cambridge-based self-driving startup Wayve, fuel delivery business Zebra Fuel and wireless charging platform Chargifi.
With $100m to spend, Firstminute Capital has a responsibility to re-invest “quite shrewdly”, Crawley said.
“We have been lucky to partner with some amazing businesses,” Crawley told UKTN.
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“We’ve invested across everything from self-driving cars, to robotics, blockchain, SaaS and gaming,” he added. “We set up the fund with the aim of being as opportunistic as possible in terms of being able to get great founders whenever we find them.”
When it comes to breaking through the noise, Crawley said the criteria was not always easily defined.
“I think it needs to be acknowledged that there’s an element of subjectivity and luck plays a really important role, not just in the success of the founder and in what he or she is building but also in terms of the decision making process of the VCs.”
The importance of resilience
Despite this, the investor went on to note there is a set of specific traits that can make a founder more attractive to investors:
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“The resilience of a founder is really important, just on the basis that its so hard to achieve when you are going up against huge companies.”
“To build a startup from scratch is such an extraordinary defiance of gravity. It requires pure resilience, grit, determination and absolute refusal to give in,” he added.
Crawley believes resilience is built by founders who are driven by something other than a desire to make money or to build a profitable business for the sake of doing so.
Firstminute searches for founders and businesses that have a ring of authenticity about them – whether that’s coming from the product or service itself or simply looking at what drove them to start their entrepreneurial journey.
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“I want to know that they won’t give up until they have achieved what they set out to do,” Crawley stated. “A combination of resilience and authenticity is key.”
As is the case with many VCs, Crawley is looking for founders with the ability to attract star talent.
“We often ask the question ‘would we go and work for this person/business?’.
A bright idea
Investors are often presented with a good idea, but often the product falls short. This isn’t necessarily a problem, though.
Firstminute is a early-stage fund; it has made and will continue to make pre-revenue and pre-product investments.
“I think the timing question is very important. It’s a case of understanding not only why this founder, but why this founder right now.”
Despite sticking to these general rules, Crawley admitted VC’s don’t always get it right. “It’s hard and even the best VCs tend to have a lot of humility because they have seen great businesses grow when they didn’t invest in them early on.”
How does the UK fit into the VC landscape?
Firstminute may be a global VC fund, but Crawley believes the UK will remain a key area of focus for him and his firm.
He said there are four key things that attract investors to Britain:
“We have really strong universities, particularly for computer science. That ranges from UCL and Imperial, to Edinburgh and Bristol. There is a cohort of universities producing great technical talent.”
Secondly, London is – and has been for many decades – a financial services hub. “This means there is a lot of money in the UK from across Europe. There is a really strong funding environment here,” Crawley added.
So strong in fact, that research from London & Partners showed that the UK has received more funding than any other European tech hub in the two years since the Brexit vote.
Exits such as that of ARM to Softbank and rounds such as Revolut’s $250m breed a reciprocal dynamic where you get founders creating really big businesses and attracting great talent, which spins off and starts new businesses, and so on.
When you have businesses that are bought for big sums or IPO there is more liquidity in the market and these people re-invest in next generation – this is partly what Firstminute is trying to do with its tech unicorn founders who all want to help turbocharge the next generation of entrepreneurs.
Finally, London is home to global HQs of big corporates operating in different sectors. Crawley adds that corporates will become more inquisitive and buy more tech businesses in the next decade.
Despite Brexit looming on the horizon, Crawley still thinks the country is in a powerful position.