After each GBx event we summarize the key questions and the most helpful insights from the session. On February 25, Angels & Accelerators Virtual Roundtable covered different approaches to accessing angel investment and participating in accelerators. Hosted by GBx co-chair Julian Gay (serial entrepreneur, investor) with the participation Danielle D’Agostaro (Principal Partner, WV Ventures) and Danny King (co-founder & CEO, Accredible). Here’s what’s been discussed during the virtual roundtable.
1. When to join an accelerator?
Founders should consider: Where are you in your life? Joining an accelerator program is a huge time commitment. Where are you in your company’s journey? Some accelerators may be a better fit once you have an established product, whilst others work best for ideation.
2. Which accelerator?
Look at the cohort of previous companies. How impressed are you by companies that went through them previously? A good accelerator program will provide investor connections, a peer network, help you think in a more sophisticated way about your product/market, and help with the first round. There are good programs in Europe as well as the US.
3. Location matters? For accelerators…
It’s hard to replicate the in-person experience for meeting others in your cohort as well as investors. Accelerators are offering virtual experiences which may still be valuable for your startup. It’s now common to connect with investors virtually but may require more founder creativity.
4. Location matters? For angels & investors, but customers matter more…
In terms of taking investment from European or US investors:
“Business first, investors second”, advised Danielle D’Agostaro. Julian Gay added: “First, go understand your customers”.
Consider the advantages of angels in the UK who can take advantage of EIS / SEIS, suggested Helen Moore (Department for International Trade) from the audience.
Note there are considerations for founders who expect to subsequently raise capital in the US. Contact GBx for resources on US Expansion.
But, if you are looking for your first money to come from the US, you don’t need to worry about having domestic investment to qualify your business. You are unlikely to have questions around “why didn’t you raise in the EU?”
5. When to take first money: Before joining an accelerator? Before demo day? Wait for demo day?
It depends. Founders that raise before demo day join the conversation already with some positive momentum. However, some accelerators don’t allow founders to raise before demo day.
Danny shared “There isn’t a right or wrong answer (to whether you should take angel investment before joining an accelerator program) but I would generally say raise as little as possible as soon as you can, enough to get to your series A, but without losing too much equity. If you can raise pre-accelerator, pre-traction – go for it! But it’ll be harder and you have to be GREAT at pitching the vision.”
He continued, “the first round is like an explosion, it needs gas and a spark”. Getting the first investor onboard is the spark and can create traction for the round. Accelerators are a great way to help with the spark.
6. How to pitch virtually?
It’s unquestionably easier to show your passion and to connect in person.
Founders need to get creative virtually such as pre-recording your pitch. If you believe in the fit with a particular investor – persist by asking for a chance to re-pitch incorporating their feedback (however founders are cautioned against persisting after the second “no”!)
Get warm introductions, experts in your space (mentors/clients / other).
Set up meaningful 1:1 within your network. You might need to start with a broader range of meetings that will eventually lead you to investors.
“Get people excited about your vision. The rest is serendipity”, suggests Danielle.
7. Should you participate in multiple accelerators?
Not recommended at the same time. You might do 2 over time. “Maybe do a top-tier program and narrow down to a program that will refine your network in a specific industry, ” advises Danielle.
8. Are angel investors active in the current environment?
Investors can do more meetings virtually and are open to meeting more founders. But angels have limited dry powder and will already have commitments to their portfolio companies.