At Antler’s fund in the Netherlands, we work with founders from over 30 countries. We have about 20 investments in our portfolio so far, ranging from health tech to fintech, marketing technology, agritech, robotics, and more. We also have founder programs running in several locations around the world, including the US, the Nordic countries, Southeast Asia, and Australia. We’ve seen a lot when it comes to pre-seed and seed-stage fundraising, and our diverse global engagements have given us clear perspectives on how to advise early-stage startups looking to grow their businesses and raise capital.
Get to market quickly–when it makes sense to do so
DocSend’s data shows that early-stage companies are focusing on product readiness sooner than ever before. In general, I agree with this approach: I think that early-stage companies should get to market as quickly as possible so they can learn from real customer feedback. However, there are some nuances to this general advice. First, some products take longer to develop and have longer launch schedules. If you’re working on enterprise technology or a deep-tech product, you simply won’t be able to put out a finished product in just a few weeks or months. In these cases, the problem of getting customer feedback needs to be handled differently.
In enterprise, for example, one approach I’m a fan of is finding a potential launching customer who can invest time in discussing with you what the product should look like. During discussions that happen over a few weeks, you can gather lots of feedback about your ideas. This can be a proxy for the kind of customer feedback you’d receive on a ready product.
Second, some investors don’t actually require ready products from their portfolio companies. Antler is a good example of this: for us, the most important thing is the due diligence our investment committee does on your team. We spend 10 weeks observing your team’s execution abilities across a number of fronts, and the insights we gather matter more to us than product readiness. When our portfolio companies reach the seed stage, we do have frank discussions about what level of product we want to launch, but at the time of our initial investment, there’s no hard requirement for product readiness. It’s entirely possible to find an investor who’s willing to work with your company’s unique launch timeline, so in your pitch, you should tailor your story to the requirements of each specific investor.
Show Me What You’ve Got
Since we don’t have any hard-and-fast requirements about product readiness, we take a “show me what you’ve got” approach when evaluating early-stage companies. Founding teams can show us all kinds of progress, like the number of potential customers they’ve talked to, the types of commitments those customers are willing to make now versus later, or the amount of time they’ve spent with you. The most important thing is for founders to go out and talk to a lot of different customers and get some level of commitment from them.
In the enterprise case, I think that time commitments are the most valuable things you can get early on. A potential customer can write up a letter of intent in an hour, but if someone is spending dozens of hours with you, they’re giving up time from their busy schedule and it means your idea is valuable to them. This is a better indicator for me than a letter of intent.
It’s impossible to pin down just one traction metric at the pre-product phase, but what I do like to see is a steady stream of updates from a founder about feedback, learning, and progress. It’s important to show me that you’re a very good executor.
How I evaluate pitch decks
When you apply to Antler, you don’t necessarily need to have a deck; we place more importance on your profile as a founder. Depending on the skillset and background you bring to the table, you can even get into one of our founder cohorts without a complete idea. If you come from a much more business-oriented background, it becomes more important to have some kind of idea of what you’re going to do.
In general, though, we do look at decks as part of our application review process. So what should go into the initial deck that you send out to investors with whom you’re making “first contact”? At the most basic level, your deck needs to have a clear structure and your slides can’t be too detailed or wordy. If this is the case, investors will simply switch off and bounce out of your deck. Beyond this, you always need to have an “aha!” moment where you’re communicating a new insight to an investor. You want an investor’s reaction to be, “I’ve never thought about it that way before!” This will get an investor excited to share your deck with colleagues and brainstorm with them about how they can help you.
Clarify your problem
Where I look for this ‘aha’ moment in a deck is in the definition of a problem. Many problem sections are too high-level, or else they’re full of assumptions that are hard to believe and that I can easily pick apart. If you’re able to articulate in a deep (yet concise) way the problem that your customer is having, then I’m likely to get excited and think you’re onto something.
Deepen your competitive analysis
Competitive analysis is another key section I look at closely. If you have a simplistic analysis of your competition (or don’t have one at all), it shows that you don’t really understand your market and that you don’t know how you’re going to differentiate. But I’ll be impressed if you put forward a detailed and crisp analysis: perhaps you say something like, “There are 10 companies in this space, but three are the most important. Here’s what these three do and here’s how we’re different and plan to win over their customers.” An analysis like this shows me that you know how to build a business in a competitive world.
Know your customers
When it comes to your go-to-market plan, it’s very obvious when a founder understands how a customer actually thinks and how to reach them. If you’re a B2B startup, for example, I love seeing what the sales process will look like, which stakeholders you’re targeting, how many steps are involved in the sales cycle, which documents you need to get to a deal.
If you’re a B2C, I want to see what segment you’re living in and how your marketing activity is going to reach that segment. A certain level of clarity on these details goes a really long way: if you know who your customer is and how to get to them, it’s much more likely that you’ll be able to sell to them.
Fit your team to the problem
Your team’s fit to the idea or problem space is also extremely important: I want to see that you’ve brought together people with the right domain experience to solve problems in your field. If this fit is excellent, it can even compensate for an underwhelming idea–your team’s fit inspires confidence that it will eventually arrive at a better idea in the same space. But if your team is a very disjointed combination of founders, it makes me think that other teams in your space will likely have more experience and domain knowledge. This is certainly a factor in deciding whether or not we want to have a first meeting with a company.
Think through the implications of your company’s narrative
When thinking about the narratives people present at these early stages today, there are two key archetypes. One is deeply customer- and product-focused: a team shows a detailed understanding of their specific problem and their idea for a solution. Another is more focused on long-term trends: it’s a roadmap approach where a team explains how they’re going to build a business over time. It’s a strategic and visionary type of story.
Both of these narratives can work, but they also generate specific types of scrutiny. For the problem-centered narrative, it’s important to see that the idea is sufficiently scalable and that this particular team is really the right group to tackle the challenge. For the roadmap narrative, can you explain clearly the sequence of events that’s going to unfold along the way? If you can logically connect the steps in your big vision, it lends your pitch credibility and shows that you have an endpoint in mind, even if you have to pivot along the way.
Here’s an example: a founder once came to us with an abstract story about sustainability, and I asked him to make his pitch more concrete. He came back and said his team was going to design technology for sub-ocean farming and, in doing so, increase the world’s food supply and generate a massive energy supply. It was a crazy, visionary approach for a long-term play–something you might hear from Elon Musk! But the plan was so structured and solid that we could see the path to the end result, even if the idea seemed far-fetched at first. This approach can work sometimes, but it’s a very different type of deck from one that maps out existing competitors and shows how a new business is already better than them.
How the pandemic has changed startup creation
There are two main types of business that have surfaced during the pandemic. One is the type of business where a team came up with an idea before COVID and now needs to make sure it can survive until the pandemic has subsided.
The other is the business whose idea is based on a problem that came to light (or was exaggerated) once the pandemic hit. This is often a very exciting short-term opportunity because suddenly there’s a gigantic need that isn’t being solved and the right business can jump in and get a lot of traction very quickly. The question here is whether the business will last in the long run, once the pandemic is over and everything is back to “normal.”
Take the example of a company in India that we invested in recently. At the time of writing, India is experiencing hundreds of thousands of new COVID cases per day. It’s a terrible situation, and in the midst of it all, there’s a startup that’s taking mom-and-pop grocery stores from around the country and putting them online. Digitizing this commerce right now is a massive short-term play: you’ll get hundreds of millions of customers in a matter of months. But there’s still the question of figuring out the long-term competitive edge and how the business model will sustain itself.
Link short-term urgency to long-term business plans
The upheaval caused by COVID has certainly taught us some lessons in how to present the most compelling case for an early-stage business today. If I were starting a business right now, for example, I would begin with a short-term hook, such as a problem that was triggered by the pandemic. This approach would create a sense of urgency and show that I’m in a position to grab a lot of market share relatively quickly. Founders who can integrate this urgency into a long-term plan stand to make the most convincing case possible to potential investors.
For more tips on raising your round, watch DocSend’s webinar on new trends in early-stage fundraising and read our fundraising research on trends at the pre-seed stage. If you are interested in building your next startup with Antler, apply to their next program in Amsterdam beginning October 4th here: https://bit.ly/352xQw5