How YOU can find Venture Capital: A story of how I did it - and so can you

A real story of how I raised capital for a startup business.

This book describes exactly what I did, how I did it and why it is so important - including the single one most important question that has to be answered for the investor.

This book is based on a real situation that happened in mid 2012. It details the problems, and major stresses that a start-up was facing in the late clutches of the financial crisis – where the banks were refusing to loan money to almost any and all businesses and individuals. Faced with this very difficult financing climate, the prospective business owner / start-up was left facing an impossible task of trying to get some money to start a company in an environment where loaning out money was just not happening.

The Venture Capital industry, as well as the associated general capital and angel investment professionals were in a situation of a massively overwhelming amount of contacts from people needing capital (an average of about 3 new proposals received each day – source in Denmark) coupled with an economy that was not doing too well. Their access to capital was in some cases drying up – and in all cases the focus on the risk-profile was much higher. It was generally very, very hard to get anyone to listen, yet alone invest in an un-tested start-up.

Concurrently, the “market for financial sourcing”, including Venture capital funds, Capital funds, Private Equity, Angel investors etc, was – and remains – a highly non-transparent and fragmented one.

Quite simply you need money – who do you ask?

There are a myriad of firms, each of whom has a specific industry focus. Some only invest in clean-tech, some only in distressed Real estate, and some only IT and tech companies, and so on.

Then they all have different levels of capital amount focus. Some are only up to EUR 100.000. Some only from EUR 1 to 10 million. Others only EUR 100 million and above.

And then at the same time, they all have a different focus point in terms of the company’s life cycle. Some will only do seed investments, some post-seed into development. Others will focus on pre-commercialisation while others exclusively post-commercialisation and yet others will only look at expansion investments and possibly exit or management buy out opportunities. It is not easy to know who to talk to in this quagmire.

In this market a start-up company called Voopii contacted me and described their problem.

Basically having a solution to the problem of very expensive international data roaming they had everything in place. After investing almost EUR 800.000 of their own money, and three years of time – they had contracts in place with global network providers, producers of the hardware, producers and developers of the SIM-card technology and software, and 35 or so customers (some of the largest companies in Denmark) in beta testing and willing to buy.

One could imagine this… to be the almost perfect situation!

However they had spent 9 months trying to raise financing, and had also hired some professional capital brokers to try to raise the financing – but these had all failed.

Faced with this situation the company founder contacted me and asked me to help.

5 months, lots of research, 6 meetings with Venture Capital funds and Innovation environments (Innovationsmiljøer), 5 meetings with Angel Investors later… we received 2 offers – revised them both – and agreed on one.

This is how I did it… and how you can too!

Patrick Drew