Announcement: Raiser — investments in venture startups of all stages
Hello readers, startups, investors. I am launching an investment platform for investing in venture capital startups by retail investors and raising a round.
Synopsis
I have another very cool, very promising product, Score for the U.S. market, which has gathered the sympathy of many investors, including NFX, Baring Vostok, Altair Capital, JointJorney, YellowRockets, Leta Capital and some other lesser-known funds, but in the end did not get enough investment. I chose the strategy of working only with those who I personally like: Igor Ryabenkiy (Altair Capital), Alexander Chachava (Leta Capital), Dmitry Smirnov (Flint Capital), they are few and all know them. And the law of large numbers did not work in my strategy, because they (the numbers) were few.
The leitmotif was one: “very cool, very much like it, but come back later” and everyone was afraid to be the first, even though the project has the potential to be the best in their portfolio. The round was for $3.7M, which is modest enough for the product I presented, but in any case, to happen “later” — you need to raise an investment round. As a result, we get a vicious circle, in which in order to happen “later” you need investment, and in order to have investment, you need to happen “later” and there is no way out of this circle, because in the early stages, we do not invest.
The most common answer a startup founder hears is: “too early for us” or “come back when you have $100k MRR” in case the investor values his reputation, but often does not get any response at all — if he does not.
And people who invest in stages before — they just don’t exist.
I did not want and very much do not want to part with the idea that I can implement the project, as it is incredibly promising — and I decided to make an investment platform and I have the capacity to do so.
Problem
Common
As a former member of a very popular startup community, I have a general ±number of startups and projects. I also understand CJM startup as a whole from the inside, I understand how they are born and die, and this is something that VCs don’t understand. I know that in Eastern Europe it’s a common practice to bootstrap (do with your own money) and these startups never reach investors and don’t appear in their field of visibility, unlike the Americans, who are presented from the idea stage and have their whole way in front of them. Startups are quietly born and quietly die. We don’t discard startups that are known to be bad at the idea stage because you can’t find out that expertise anywhere — look on LinkedIn to see who has closed messages, an American investor or an European one. Surprise-surprise!
We do not have the institution of networking (acquaintances, exchange of experience), advising and mentoring. The startup manager often becomes a victim of “sticklers” who sell their services, “packers,” “pickers,” and other info-girls who just want to make money on the startup.
We don’t have this culture of “raising money,” we don’t have this excitement — this elevator doesn’t work. By the way, investor money is also a strong motivator.
European VCs always try on the American/global market, to use their own method: American population differs from European population by 2x, if we extrapolate these numbers — it’s hard to imagine that Europe has less talented entrepreneurs, right?
Looking at the chart above, we have more investment events than deals. But on the whole we can see the potential, the opportunities, the trend.
In the following chart, the logic is not complicated — in order for something to grow at the top, it needs to be invested at the bottom. In order to have something to invest in on the Late Stage, which the venture capital wolves love, you need something to feed Angel-Seed, Early Stage — it is a mystery to me why this obvious logic does not work and we are playing the Hunger Games.
Other than that, the startup as such has very little to say about itself.
Startup founders
We don’t know how to present ourselves, and I am no exception. We are not taught how to sell. Many startup founders don’t know what a presentation, pitch deck, P&L, unit economics, Cap table, etc. of the fundamentals on which venture capital is based.
When I went to present for the first time with my first startup, I didn’t know any of this. Exactly zero. I’m very sorry that no VC at the time had the empathy to tell me to do a pitch deck and provide some numbers and not waste my time — and I just didn’t know that and lost a lot of time.
To gain expertise I went to a once helpful and friendly startup community and collected this knowledge bit by bit over many months — though it was a good idea to start a startup with this knowledge.
In general, as a rebel, I’m incredibly annoyed by any patterns, “cases” and following the rules (especially when you don’t even know about them) — you have to fit into some format, try to please yourself, arrange the slides in the right order. Guys, I love creating incredible products and communicating with clients, honestly! I don’t want to do robotic work with zero calories and following some mythical rules — I love optimizing and hacking the rules!
briefly:
— We don’t know how to present ourselves (and neither do I).
— In general, it is not clear who to go to — neither for money, nor for expertise, nor for people. It is not clear who is active and who is not.
— The push model is incredibly inefficient. Sending out thousands of emails with an alleged “personal approach” has a low conversion rate, a lot of pointless work, zero empathy, and pure hypocrisy.
— Ignorance of the rules by which venture capital lives
— Not raising money from scratch
Investors
In general, investors know the postulate that the higher the risks, the higher the return. Venture investments are the riskiest investments, but at the same time it is an opportunity to earn hundreds, thousands of X’s, especially when entering in the early stages. As it turned out, no one is safe from the risks on the stock market either.
Qualified investors, tear-1 venture capitalists, funds in general are fine — they can choose, take risks with their money and everyone knows them. Lesser investors face the same problems as startups — no one knows them, they have no pipeline (startup funnel), it’s hard to like them, they often can’t invest large sums, because they need diversification. It’s hard for them to get a good deal.
I have to join different clubs, business communities, syndicates in order to get an impersonal memo and offer to share risks by following the fairway. In general, the clubs are very popular, in those that I know, sometimes a thousand, hundreds of members.
In some business clubs make money on the investors themselves. Somewhere they take a rent for access to a pipeline (a list, a funnel of startups) — no startup knows that recurring revenue is stability.
Selling courses, intensives a la “how to become a successful investor in 10 days” — by the way, for the founder there is no worse investor who took some courses, but did not get personal experience. The tales that founders tell is impossible to forget — sometimes it happens that at the pre-seed stage they ask vintage (cohort analysis) and flaunt clever words — but do not understand to which stage what tools are relevant. By the way, if you look at the portfolios of many popular funds with unicorns, you may notice a correlation that investments in these companies were made at the dawn of their careers.
There is no place that shows a list of promising deals and companies to enter.
briefly:
— Inflation (non-performing money is burned in any currency)
— There are fewer instruments.
— No pipelines
— It is not clear whether a deal is promising (demand is unclear)
— No possibility to make own decisions
— No reputational tool
* is not an investment strategy
Solution
As I mentioned, the push model is ineffective, the pull model is effective — publishing articles, posting (and essentially presenting) the project on services like Product Hunt, Raiser, Republic, etc. — We immediately reach a lot of people in a concentrated way, we get target customers and interested investors who already have a liking for the product.
The solution is not unique, as I mentioned at the beginning, there are Republic, Angellist, Wefunder and other services, very popular, they have their own drawbacks, for example the entry thresholds (or fixed jurisdictions), besides that I have unfair advantages — a full advertising stack (advertising network, which is the basis of the project), and therefore the ability to attract both startups and investors outside the platform, besides the fact that the project already has a very strong virality.
The investment platform solves the problems I mentioned above by making it possible to systematize information from startups — they just need to fill out a form, attach pictures and files, and specify the terms of the deal — you get a ready-made presentation. And investors just choose the companies they like and agree to the terms of the deal and deposit funds. It is technically possible to accept funds in any currency, and provide service and content in any language.
The deal will be made by the platform, the tools for transactions are planned to be as simple as possible, so that it would be convenient for both startups and investors (given that there may be thousands of them per project), but remain reliable for everyone.
I really liked at Apple’s last presentation that they had a VP of Human Interface on their team who presented Dynamic Island — here I also really want to make investments with a human face, so it’s a win-win for everyone.
In addition to presentations, founders will also be able to keep updates (and investors, respectively, monitor the progress), it is also planned the possibility of posting vacancies and the ability to attract expertise (advisers, mentors) — the same presentations will appear and for them as for companies, it is immediately visible where (or on what) to work. Many people dream of working in great companies, but do not know about them.
Round
Money is opportunity. In my case, these are opportunities to scale back, to launch now, to delegate and not look for workarounds to launch, and to provide service of appropriate quality — to deploy in the necessary configuration, not to think about attracting a new round for the next year. Depending on the options — for example with or without an advertising service — it’s different money (and the load is different). Fewer headaches. In the long run, I’d like to hire a copywriter and designer — so that I can cut investment materials.
Basic parameters:
Market: US, MENA (Israel, UAE), EU.
Go-to-Market: Own advertising platform (own advertising traffic), virality, content marketing.
Business model: Charges 6% of the total fundraise in cash, only if successful, and 2% in equity
Traction: about fifty early adopters and huge demand and grow every day, strong interest
Round: Starting from $534k (12month runway)
Startup economics:
CAC: ≈$10
LTV: from $18k (6% of minimum $300k) management fee + carry (depends on further rounds)
Investor economics:
CAC: ±$18
LTV: ≈$600
We have own advertisement, and own ad units like this:
Something is likely to change in the future, in reality the metrics are likely to be different, as I see in Republic, with a minimum check of $250, the average is $650, and LTV is certainly even higher. From project to project they are different, of course.
First of all, it is an opportunity to get into a promising startup, get some fame, and, of course, have a significant impact on the investment market.
I hope that I will succeed, but otherwise — I will have to play the long game and scale slowly.
That’s all for now. Thank you for finishing this article. If you liked it, please support the article and share. Ask your questions, write your suggestions and ideas!
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Progress on the project on LinkedIn (eng), Facebook (eng), Telegram (rus)
