Hi! If you’re a first time entrepreneur looking to raise funding for your startup, we’ve prepared a few useful information, based on what we’re often asked about.
What’s SMOK’s investment strategy?
SMOK Ventures invests in early stage startups in Poland across the key growth sectors. Ticket size is 400k-2M PLN as initial investments. With possible follow on of next 2M PLN. Therefore up to 4M PLN per startup.
How do I start the fundraising process?
The first step is doing your research. Every VC has their investment policy they follow. You should look for VC checking those information:
- Stage of development – each fund specifies if they do seed investments or maybe round A
- Ticket size – know how much you’re raising and how it fits into VC’s ticket size
- Industry – each VC has their own industries they feel comfortable with investing and assessing the market.
Also remember to check previous VC portfolio, so you know how you fit in, but also it’s a good place to validate a VC. Remember that VC validates you but you should also do a check on them!
It’s also important to check where from the VC has the money, as each source (private/public) has it’s own limits.
How do I approach chosen VC?
Intro from someone you actually know that we also actually know and trust will be the best way to get to us.
However good intro is good, but a good clean cold email will do.
Examples of good intros:
- later stage VC
- fellow entrepreneur
- former employer
Examples of not-so-good intros:
- someone you met via linkedin
- or at a cocktail party last week
- close family member
How to write a Good Clean Cold Email – GCCE™
- Short – max 3 paragraphs
- Grabs attention
- who you are and why you are relevant
- what you are working on
- how we can help (as in how SMOK and our partners can help)
- call to action
- Attach a deck in PDF
Good clean cold email is better than a not-so-good introduction.
What makes a quality deck?
There is a basic set of information which will help us quickly get to know you and quickly validate if that’s something that interests us.
- are clean,
- covers the key areas:
- why now
- business model
- help us understand the industry at a glance
- don’t make us think!
How to build credibility?
Your only task before getting a meeting is to build your credibility.
- Quality of your deck
- Quality introduction
- Previous gigs (e.g. former VP Google)
- Projects you’ve built (e.g. built and sold this amazing company)
- Showcasing a research or article you wrote or an event you organized
- People in your advisory board, current or former investors
Common reasons for a ‘no’
- Broken cap table
- Not thinking big enough
- Market too small
- Focused on Polish market
- Founders not 100% focused
- Too early
- Too late
- Not our industry focus
- HQ not in Poland / EU
- Burn rate
- Bad reputation
Broken cap table examples
- Investors own more than 25% after seed
- Investors own more than 40% after series A
- Dead equity (non-operational co-founder)
- Software house owns a large chunk of equity (spin-off)
- One co-founder owns significantly more equity for no good reason
- No ESOP
- Why Your Startup Will Fail by Borys Musielak