4 keys to getting VC investment for your startup in Switzerland
If your startup is “born and raised” in Switzerland, then you probably know that finding as significant amount of venture capital for your project will be a challenge.
At least it will be a good deal harder than walking down Sand Hill Road in California and collecting millions.
The traditional, conservative approach to business that has prevailed in Switzerland over the last half century continues to prevail, although there are more and more venture capital firms coming up in the Alpine paradise.
But even though the tradition of venture capital is not as strong in Europe - and especially not in Switzerland - as in the United States, there is still a significant chance that you will be able to land a check that helps get your idea off the ground.
Here are four key steps that you should not neglect if you are looking to raise money in Switzerland - four steps that (surprise, surprise) have a lot to do with communication.
Step Number 1 - Document everything
The first thing a venture capital firm will do when they decide to take a closer look at your project is to do a due diligence.
And this is not for the faint of heart. This is real.
Due diligence is not reading your website over a cup of coffee. Due diligence is not flipping through your slide deck and then sitting down to write a check.
Due diligence means turning over every stone and looking into every corner of your team, your tech, your organisation, your current funding and, yes, even looking into what kind of toothpaste you use.
In short - due diligence is what makes or breaks your chance of getting investment from a VC. Your idea may be great, your tech may be revolutionary, but at the end of the day, a VC is looking for return. If they give you money, they want to minimise their risk and maximize their potential upside.
So - what do you need to do? Document everything.
Take the time to create detailed profiles of your team members. Find someone on your team that can write reasonably well and create a log of your progress, including semi-detailed technical specs of your development.
If you do this on GitLab, consider transferring this to Medium or another blogging platform that is easily shareable. VC analysts may be fine with reading your repo and notes, but if you put it up for public viewing, it raises your credibility.
Also very important - document your costs. This is one point that most (read 99%) of early-stage startups forget.
It’s the balance sheet, stupid.
When VC shows interest in your company, he or she will want to know (pretty quickly) your burn rate. In other words, “where is the money going” and "where will it go from now on?”
If you have no idea or can’t show this information - you can kiss your A round goodbye.
Step Number 2 - Collect user/tester feedback
A second part of “document everything” is documenting the progress of your product or service.
This goes beyond just the commits in your GitHub repo. It also means gathering solid information about how people are and will be using what you create.
Now - how can you collect this information if you haven’t gone to market yet?
You need to “go to market” - even before you “GO TO MARKET.”
It goes without saying that as soon as you have something that works, even in the clunkiest of manners, you need to put it into the hands of people who can give you honest and clear feedback.
This isn’t rocket science - it’s called agile development.
But what some startups miss is implementing clear communications channels that allow them to collect and aggregate that feedback.
Do you have an open forum for beta testers? Telegram is good, Intercom can be useful. Social media is great for retail-focused products.
Whatever you do - you need a process and a dedicated tool…and a dedicated person(s) to collect this feedback.
The evidence this provides could be the maker or breaker in your next round of financing.
Step Number 3 - Focus on partnerships
If you know that Swiss venture capitalists (and their German/French/Italian cousins) are conservative in their investment theses - you should also know that they highly revere their market incumbents.
Translation: disruption is a semi dirty word. Yes, VCs live off of the opportunities that are created in by turning existing market dynamics on their head and building something totally new and revolutionary.
But the dirty little secret is that people often avoid is this - you are small. You need help. You need more than money.
So, what do you do? You swallow your pride and you go after the incumbents…not as the bad guys, but as your friends.
Why is this important? Because a conservative Swiss (or German or French) investor (like many investors) will want some reassurance before cutting a huge check.
What better way to reassure the analyst team that your project is for real than to drop 4 or 5 well-known logos onto your presentation slide and show that, “These guys accept my product, why shouldn’t you?”
Social proof - beyond the level of user acceptance and feedback - is key to winning over a big-time fund.
Step Number 4 - Build a coherent online presence
Last, but not least - be consistent.
Venture capital firms are looking to make money -we all know this. Many of the more adventurous will look to turn a quick profit with an exit soon after they jump in.
However, in Europe the tendency is different.
Sustainability is a key topic and a major factor in how investors view their portfolios. Beyond the bottom line, can a VC count on you and your team to raise the profile of their fund, by becoming a company that “goes to the next level?”
With this in mind, you need to build your online presence in a solid, consistent manner. Don’t think about being in this for a year or two, think as if you were building a brand for 20, 30, 50 years.
If VCs see that:
your blog and your website copy match the messaging that comes across in the social media of your team member
your CI/CD makes sense and that your elevator pitch aligns with your company profile on Twitter
they will subconsciously get a warm fuzzy feeling - and smile. And that means you’re in good shape.
Beyond that however, a strong, clear online presence means that your chances of attracting attention beyond the Swiss market improve as well.
The world of venture capital is international - and contrary to popular belief - few venture capital funds in Europe are not always full of money. Even if they like your company, they may often need to bring in another partner to fill out a round.
You can make it easy for them to convince others (even their own LPs) to commit if your digital messaging is clear and crisp.
Obviously, these steps are not the only factors in assuring that your team gets the funding that you need.
However, if you keep them in mind as you set out on your entrepreneurial journey - in Switzerland and beyond - you will be well on your way to gaining the respect and support of your investors.