Investors pitching to start-ups – you certainly don’t see that every day
On Tuesday, London housed the fifth Capital on Stage event, in which 18 Venture Capital (VC) funds and angel investors pitched their services to 150 Internet start-ups ready for funding.
Previous events took place in Amsterdam, New York and Berlin. The unusual format puts the spotlight on investors, rather than start-ups, as they share their views on the market and provide insight into what they’re looking for in their next deal.
Every participating start-up is thoroughly screened and the tickets are only sold to company founders – not advisers, mentors, consultants, recruiters or marketers. The result is an informal meeting designed to keep dozens of start-ups in good financial health.
Show me the money
Capital on Stage offers a new twist on a classic format, with investors trying to convince start-ups to take their money. According to several participants, the real value of the event is in the networking opportunities – that is, being stuck in a small room with people whose job it is to spend billions of pounds.
“Me and a friend in Amsterdam both had companies of our own. At the time, we were looking for funding, finalising the business plan and recruiting a team. We thought, how can we demystify this process? Break open this black box of investment – what do these people do, who are they?” Arjen Strijker, founder and managing director of Capital on Stage, told TechWeekEurope.
“We thought: let’s flip the model, put the investors on stage and see what they can offer. And then you have the beginning of a dialogue.”
“Events like this are not in the content business, they are in the people business,” Fred Caballero, co-founder and CEO of start-up travel network Bizpora, told us. “I’ve recently been to LeWeb – apparently one of the most successful Web conferences in Europe – and it’s clear they still think they are in the content business, all about keynotes and the latest trends. But what people want from these events is to meet their next investor, partner or collaborator.”
So which aspects of the business interest a venture capitalist ready to invest? First of all, it’s the protection of intellectual property. A technology start-up isn’t going to survive long if its product is not backed by original ideas, which can be defended in court.
Location where the company was founded or registered is another point that is often overlooked by young, enthusiastic companies. Legal requirements for businesses vary between different regions, same goes for tax systems – something that recently came into spotlight with G8 countries pledging action to tackle tax avoidance.
Several experts said they also require the basic knowledge of the corporate structure, and place big emphasis on transparency, especially where spending is concerned.
The choice of a VC fund is important because the right investor can safeguard young companies against mistakes that they’ve seen repeated over and over again. However, the model itself might not be right for everyone. Gaurav Tuli from Fidelity Partners had actually advised start-ups to avoid VC funding if they can, since it comes with a lot of pressure and countless requirements.
A viable alternative is finding angel investors – individuals who put their own money into businesses and, as a result, are much more ‘hands-on’. “London is a great place to do this right now – in fact, there is probably no other place in Europe to do this. Such a developed ecosystem means that at every stage of your business, there’s somebody who wants to take that risk profile,” said Anil Hansjee, former Google executive and now an angel investor.
Capital on Stage is coming to Singapore on 24 September and New York on 7 November. In December, the organisers plan to franchise the event as either ‘Capital on Stage X’ or ‘Capital on Stage Sessions’, so many more are coming.
“We have people in Paris, Istanbul, Warsaw, Tel-Aviv and San-Francisco. With this line-up, we want to test the model between December 2013 and December 2014. If it works, we are ready to offer more,” said Strijker.
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