I Helped Raise €5.2M: Here’s How You Can Do It Too!

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As you can see, I’m currently on a ski break, enjoying some family time. And usually I make it a point to completely unplug and stay in the moment during trips like this. But I just got a text message that I felt I “had” to share, or I wanted to share…

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It’s from the founder of a French company—a French startup— I’ve been working with to help them with their Series A Funding… And he just confirmed by text that everything is now officially locked in. So, they’ve officially secured €5.2M million euros in funding, and I’m really thrilled for them.

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But at the same time, it’s also a rewarding feeling, you could say, to see all the hard work, and all the hours that we put in to pay off. And let me be clear when I say this, it’s not just about ME. Of course, I like to think that I’ve been a contributing factor to that success, but they’re also really an incredible team and with a brilliant vision.

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Anyways, all of this got me thinking while I was skiing down that slope: why not take a few minutes, I can use the pause and the view, to share with you everything I’ve learned about raising money… in Europe, specifically because, Europe is not the US it’s not…

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It’s a completely different market. Whether you are a founder, an investor, or maybe just curious about the process, I think you will probably find these insights quite valuable. Maybe just to start with, especially in the startup world.

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And in this case, we’re talking about fintech. So, it’s the startup world. You are dealing with investors who generally don’t have the same… How would you call it… “Risk Aversion” as more conservative investors. A conservative investor looking for a steady 5% return per year.

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And let’s be real, it’s extremely hard to find RISK capital from CONSERVATIVE investors. With that in mind as a context, the founding team and I, we spent a lot of time thinking about the strategy.

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How are we gonna get that? What’s the strategy to get that risk capital? And here’s the thing, fundraising becomes so much easier when you truly understand concepts like optionality and upside…

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It may sound technical, but the idea of optionality is pretty straightforward to understand. Optionality is when you say, “Okay, if I invest in this, the potential upside is so much bigger than the downside that I cannot NOT invest.” Why?

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Because, sure, in that context, I might lose this much, but the potential upside, it’s unlimited or… I don’t even know how much I could win. What happens is, when you are able to present things in those terms…

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because a lot of people make the mistake of thinking, “Okay, investors will want to put money into my company because it’s “safe.” Because they’re “sure to win,” or at least, they’re sure to “minimize their risk.” But what I quickly realized is that the startup game is almost the opposite.

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It’s more like “I’m betting on this founder because there is a 5% chance they’ll build something that could turn into a billion dollar company, into a billion dollar opportunity. And I want to buy into that 5% chance.” It’s like buying an option for a billion dollars—or euros— at 5 or 10% odds.

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“And I know when I do that, that 95% of the time it’s NOT gonna work out.” So… When you pitch your company—your startup—I think a lot of people make the mistake of framing it like “There’s an 80% chance that this will work and you will… 3X your investment!” But the reality is… If we’re talking about “risk capital,” you should be saying, “No! There’s a 5 to 10% chance this will work, but if it does, it will 1.000X!” Again, we’re talking about startups and “risk capital” here.

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For example, imagine you’re a VC —a risk investor— a Venture Capitalist, and I come to you and say, “Listen, this guy Joe, might just be the one who will dominate the… humanoid robot market…

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He has the potential to be one of the top 5 players in the world in that field.” But here’s the thing: You don’t know, right? It’s such a long shot. Because he’s just getting started, there are only 5 people in the company, etc. BUT “He’s incredibly well positioned to be in the future top 5.” Now, it’s possible this market might not even exist in the future— Humanoid robots… We dream, we dream big, but maybe it’s like “flying cars” back in the day…

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It might never actually happen. But as a risk investor, you think like, “Okay, damn… If that Joe, if he pulls it off, it’s a 1.000X return for me… So, it’s a bet I’m totally prepared to lose because, IF it works, it’s gonna explode!

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It’s gonna skyrocket the value of my fund!” And you would prefer THAT vs. someone who comes to you and says, “I’m opening a chain of restaurants and… it will 3X your initial investment.” Sure. I mean, it might work. It’s restaurants, there’s a low risk.

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Something like, “I already have 5 locations and I’m planning to open 30 more.” But it’s NOT the same kind of asset. That’s a completely different type of investment. You would go to a different kind of investor for that. And also, I mean, what if you are not a startup investor?

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What if you have something more conservative to pitch? Well, the idea is, everything that I’m telling you now about optionality and upside is the total opposite. I’m gonna tell you how you need to embed a few cues in your pitch. But it’s the total OPPOSITE that you need to do if you’re not a startup, if you’re not aiming for risk capital…

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And if you can back it up, of course. Back to the main point, people who pitch like this —the restaurant type, it’s 80% sure, 3X in return— which is the default reflex. If you pitch like this to investors who are ONLY looking for optionality, you’re completely missing the mark.

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Not all investor profiles are the same. If you pitch RISK to a CONSERVATIVE, your chances of securing funding are … one in a thousand. And if you pitch guaranteed STEADY results over time to a RISK investor, same odds.

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If you pitch a startup: You pitch OPTIONALITY, you pitch upside. Of course, it’s not only about pitching “big numbers” and bold promises. You need to back it up. The moment you have signs, little indicators that suggest that you could become the new standard— or a new standard—that’s when things get exciting for investors.

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For example—I’m not gonna name the company I’ve worked with yet—but… let’s say your pitch is, “We have the potential to be the OS—the Operating System—on which French, or Belgian, or German small and medium businesses run their operations, run their business.

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There are what? 2 million small and medium businesses in France alone I think. So, if you become their Operating System, and everyone manages their business through your solution—or even if it’s just 10% of them—that’s huge.

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That’s massive OPTIONALITY here. Right? And of course, it’s gonna require tons of modules, and partnerships and integrations, and… There are thousands of ways it could crash and fail, but… IF it works cha-ching Jackpot.

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Right? As an investor, you are buying this option. In your pitch, and your vision, you need to show as many signals as possible that PROVE, or at least SUGGEST, that there’s a real chance this could work.

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That you’ve got people adopting your product, people who love it, Opinion Leaders who’re talking about it, and so on, and so on. So, the idea is how many CUES can you embed? And the more you show these kinds of PROOFS, the more investors will think, “Okay, this guy—or this gal—is well positioned…

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IF this market is ever gonna take off in the future, they’re in a great position to be the ones who’re gonna dominate it, or at least grab a fair share of that market vs. anything or anyone else already out there!” And that’s the key! You have that optionality and again, we’re talking about the startup world here, but the principle is solid.

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It can absolutely be recycled into more traditional industries too. It’s just that it has to be balanced off. Now, obviously in the case of the founders I’ve worked with, the equity story, as we call it, is one where we’re dealing with a SERIES A round.

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At that point, especially in Europe, you usually already have “proof” and “indicators” of a reasonable market fit at least. But I think it’s really interesting to talk about “How to raise SEED money?” How to test the idea?

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Evaluate the market potential? How to gather evidence? The first proof points you need to secure your initial capital—the first 200k, the first million. In a nutshell, if I was in that position… Here is what I would do: If you have an idea, if possible, validate it with a landing page.

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Have an idea, validate with a landing page. For those who don’t know what a “landing page” is, it’s quite simple… A landing page is a simple one-page website that’s laser focused on a specific problem, or on a specific theme…

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And its only goal is to convert “visitors” into “prospects,” or “leads,” or maybe sometimes even into “clients” by driving them to one specific action: Booking a call, requesting a quote, or even making the goddamn purchase.

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Of course, to build such a landing page, this means you have to have a DEEP understanding of your target audience. You need to build a very detailed “client avatar,” understand their pain points, their problems, their frustrations, their dreams, their hopes, their lifestyle, their interests, their values… The psychographics. And of course the basics…

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the basic demographics as well. What’s the… typical gender, age, income? Once you have nailed that avatar, and I insist on the nailed, because it’s crucial. Once you have nailed that, start with a landing page. A website that talks to that avatar.

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And the goal here is to test the market’s appetite for your idea. And even if it’s a software idea and you haven’t started coding yet, it doesn’t really matter. You run Google Ads, Social Media ads. You create a great video, you pitch the idea. You push it hard out there and see if people are genuinely excited enough to buy.

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So that’s one, you build a landing page. Two, if possible, try to see if they’ll actually PAY for it. And you can do this, in two ways. You either have them click that BUY button, and then you show something like “Service not available yet” message…

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When they click the buy button. Or you actually CHARGE their card, and you refund them afterwards. I personally would highly recommend the second option. CHARGE their card, because it’s the best way to see if people are really willing to pay.

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And then you refund them, with a message like “Not available yet” or “Temporarily unavailable.” But you refund quickly, immediately. Another great hack is… You make them buy, you charge their card, and you collect their phone number.

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And when they buy, you call them. You pick up your phone and you call them. Once they’ve made the purchase, you just call and you explain the situation. You let them know the reimbursement is already underway. Because people like that trust me, I’ve tried it in…

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I’ve tried it out in other businesses and contexts, but they like that. And you tell them that you’re currently TESTING the market. You thank them for their trust, the basic commercial stuff… You can maybe let them know that they will get a 50% discount when the product becomes available…

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But it’s not calling them JUST to say that. The key is use this opportunity to SURVEY them, ask questions to better understand who they are, what triggered their interests, what are their expectations, etc. Any insights that can help you refine your product, and refine your pitch.

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Maybe even interview them… That’s something that you can use in your pitch deck. People saying, “Yeah, I bought this because ABCD!” If YOU tell it, it “might” be true. If someone else tells it, it’s already stronger. So that’s three. And I would say four…

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Once you’ve confirmed the market, that the market shows real interest, and you’ve confirmed the pain point is real. What you then do is you build a prototype or an MVP, as they call it— Minimum Viable Product— and then you LAUNCH…

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If the business model allows, of course. But here’s the thing: You will always be in a stronger position if you’re already generating revenue. It gives you leverage when it comes to raising funds. Now step two, once you have done all of that: You’ve tested the market appetite, you maybe are generating money.

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The question becomes, How do you find your first investors? The founding circle. And I would say the “trick” here is pretty simple. ASK AROUND. Start with your network, even if it’s a small one. You would often be surprised…

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“Who knows who,” who knows private investors, who knows someone who’s already been through this process, or knows someone that knows someone… You know, the 1-2-3 layers of your network. And if, for example, someone knows someone that has already been through that process, you call them.

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You pay for lunch or coffee, you ask for advice, you ask for contacts, maybe even if you have a good vibe for INTRODUCTIONS. Who knows, if they’re already further down the road, they might even give you some seed money… But see if they can connect you with the right people, or at least point you to the right direction.

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Now, if you’re considering, going down the route of VCs, Business Angels, or institutional investors… DON’T just reach out through their website. Don’t just go to the contact form or sending a cold email like, “I have an amazing idea, PLEASE, let’s talk!” Usually you won’t get…

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It won’t get you very far. At best, you will start the filtering process with analysts and junior associates in their firm. Let’s also be honest, what I’ve heard many times is… you will often be ignored or snubbed if you’re not introduced by someone they trust.

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Just think about it from their perspective… Now I’ve just been interrupted by a huge group of people snowing off track. That happens. They [VCs] just get so many inquiries. That’s where we were. And… a side note maybe, for the current situation, is that the market is starting to turn around a little bit.

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At least that’s what I hear. So, I would say that there are today more investors than SERIOUS candidates for their money. If your idea is good, something I would say… Or even if it’s not actually… Apply to
Y Combinator, aka, it’s also known as YC.

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It’s one of the most influential and well known startup accelerators in the world. I think they are behind Airbnb, Dropbox, Stripe and many,
many more. And the good news is ANYONE can apply. It’s hyper competitive but there is no need for prior success.

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Anyone can apply… Of course, YC they look for big bold ideas that solve real problems. So, they will prioritize startups that address large markets, or that are working with innovative technology that can be… that has some leveraging potential.

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So, I would say: Try it out! See how far you will go. And… one of the other side benefits is when you’re prepping for YC, it’ll also get you ready for the rest of your journey. So… Y Combinator, like the letter Y… YC.

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Now, back to reaching out to your VCs and investors. As I was saying, DON’T go through their website. Find the partners emails, and reach out to them directly. Again, you need to understand the dynamic here. We’re talking about people that are incredibly busy, on one hand, and constantly harassed, you could say on the other hand.

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So, your MESSAGE when you reach out needs to be short, to the point, intriguing, engaging… And something else is that so many people get discouraged by this process. But, don’t be fooled. You may have a great idea, you maybe have one of the best ideas…

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The world doesn’t
know it yet. Here I was thinking that going off-track would buy me
some peace. But no, I was interrupted again. I tend to get lost now in my train of thought… But I think… What I was saying is don’t be… fooled when it comes to fundraising.

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So many people get discouraged when they don’t get the immediate result. But fundraising IS,
and will remain a statistical game… It’s a numbers game. The first few NOs you
will get, what will usually
happen is your ego is gonna
start “tripping.” You will think like,
“I must be the problem!”
or “My product must be the problem!”
or “Maybe there is no market
fit after all!” And it could be…

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Never completely
dismiss this idea. Never fool yourself the other way around. But often, it’s NOT
the problem. It’s just that you haven’t reached out to enough people yet. You haven’t had enough conversations, you haven’t pitched enough investors yet.

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And this is where
having proof of traction, revenue,
market validation… Having proof AHEAD
can really optimize and maximize your odds. If you can say, “I’ve tested the market, we’re already generating some cash… This is what we have
as RESULTS.” That’s…

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That will optimize
your odds. Most European entrepreneurs I’ve talked to,
and who’ve successfully raised money, they’ll all tell you the same story. They met with 20, 30, 40 investors before closing a deal.

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And again,
since many will never even REPLY
to you, this gives you an idea of the amount of outreach that must
be done. Go ALL IN with this. Don’t approach this as a one-by-one thing… “I’ve sent an email to this one, now I’m gonna wait….” No! DON’T wait for
an answer before moving on
to the next.

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GO BROAD. “Broad” means: Reach
out to as many as you can.
But also, GO DEEP. That’s the thing. You go 2D here: You
go broad. You reach out to as many as you can, but you go DEEP. Don’t be generic, okay? Don’t send generic crap out there.

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Study each fund, study each investor. Find out who they’ve invested in. Reach out to those founders, connect with them and interview them. Learn from their experiences. Learn from any source, and use those insights to tailor
your pitch.

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“You took a bet on them… WE this.” Think of it like a
sales funnel. Again, numbers game. You might have 200,
300 outreaches… 40 first meetings, 10 second meetings,
and then maybe 3 serious discussions.

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And then, IF you’re lucky, you will get a Term Sheet. Or maybe even multiple Term Sheets… But already if you get one. The key really is:
COMPRESS TIME. Don’t spend a year looking for money. Go parallel,
not sequential.

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Otherwise what will happen is it will eat up all your productive time
and energy. It’s a short burst of intense and dedicated effort. Now, here’s something… I understood from this experience I’ve just been through: Funds…

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How can I put
that politely… Funds, or investors, they’re often like…
flirts or teases. They don’t know if they want you yet. So, they’ll hype you up. They will keep you engaged as much as possible to make sure that
you stay in their process. Only to later maybe say, “Oh actually, no thanks!” And that’s just the game.

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A few founders have already told me that—two founders
told me that actually—that after
the 3rd or 4th meeting they had, they called their friends or family, they went crazy: “It’s DONE, we’ve got it!” And then… the funds just stop
taking their calls.

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Often they won’t
even bother to tell you they’re out,
or the “why.” And again, it’s just
like sales… If a prospect stops answering, they are just NOT interested. Move on. I don’t say that you
don’t need to reconsider them at
some time further down the road…

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To schedule a later
follow-up, or maybe go back to these funds when you’re in your
Series A, or Series B. But yeah, move on. Broad, deep,
intense effort. It shouldn’t take a year. There you have it, a “snowy crash course”
on fundraising.

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I hope you enjoyed it. That you got some value out of it. And now, let me go warm up a bit and just
hit that slope. Thanks for watching.