Investors, financing, finding the right match and the pitfalls of big capital. Our Founder Talks host Evelien Bouma discussed the ins and outs of the Dutch startup investment climate with Bart Wesselink (co-founder Paylogic International and Chief Financial & Operations Officer at bunq), Jellie Tiemersma (founder Personal Too and informal investor at The Next Women Crowd Fund) and Thomas Mensink (Startup Analyst at Golden Egg Check).
What’s the investment climate like these days? What are investors looking for in a startup? And what do startups need to know before entering a committed relationship with a venture capitalist? Here are a couple of highlights of an all new edition of Founder Talks. If you want to watch the entire episode (in Dutch), just click on the link below.
The current state of the climate
How are we doing as a country, compared to the rest of the world? Pretty good, according to Thomas Mensink, who brings startups and investors together at Golden Egg Check. “Last year, around €1.5 billion was invested in Dutch startups, and we’re probably going to top that number this year, despite the pandemic. Dutch funds are growing bigger too, there’s more expertise and we’ve gotten to a point where VCs are sometimes competing over startups, which I think is a really good sign. You also see investment firms from the UK for example, looking to invest in high potential Dutch startups. It’s a good time to be a founder.”
What investors are looking for
As an investor, Jellie Tiemersma focuses on female founders with The Next Women Crowd Fund. “We look at the market and the potential, but we also think the team is important”, she says. “You can have a really great idea, but that doesn’t mean anything without the right people to turn that idea into a successful business. And for me personally, I also look at the societal value behind it. Can this also make the world a better place?”
Thomas Mensink agrees. “There are a lot of aspects investors look at, but if you were to summarize all of those things into two criteria, it would be potential and feasibility. Potential is looking at the long term and trying to figure out how big of a success can the startup become. And feasibility is short term, meaning how likely is it that the startup will reach that potential. All of the investment criteria, like team, market, competitiveness, scalability, ability to execute, they all revolve around potential and feasibility.”
What startups need to know
So when you’re looking for funding, what’s good to know? “Think big, kick ass!”, Thomas says. “Believe in your idea, be optimistic and confident, because that will really help in convincing potential investors. But at the same time, be realistic and really test your assumptions, because overconfidence and blind optimism will bite you in the ass.” Jellie agrees: “One of the first questions I usually ask is why would you only want to sell your product in the Netherlands? Why not the rest of Europe? Don’t limit yourself by thinking in terms of borders. Think big.”
Bart Wesselink adds that startups also need to look past the size of the investment. “Look at the investor, not just at the money. Because the money will help you grow in the short term, but the investor is in it for the long haul and will still be there after that money is gone. It’s like dating. You wouldn’t want to be stuck in a long term relationship with the wrong person, right? Don’t go rushing into deals, talk a lot, make sure you share the same vision and do your homework. And talk to other companies this investor has funded and ask about their experiences.”
Do you even need an investment?
We tend to measure the success of a startup by its ability to land big investments. But do you really need an investment? “It's funny, because I think this is also an interesting difference between male and female founders”, Jellie says. “Quite a few female entrepreneurs I talk to aren’t necessarily looking for big investments, because they value their autonomy. They’re very ambitious too, but they want to be successful on their own terms, without being tied to an investor. I guess they tend to be a little more cautious in that sense.”
Bart Wesselink is more adamant about landing investments: “Absolutely, because things will go so much faster with capital behind you and the right investor on board, unless you have very deep pockets yourself. You’ll also still have your freedom if you do your homework and find the right investor.”
Thomas Mensink disagrees: “There is a lot of focus on landing investments in order to be successful. But I want to stress that there is absolutely no shame in bootstrapping your company without any investors. There are plenty of examples of companies that became very successful without outside financing. You need to look at your own situation to decide whether or not you need financing. It depends on the stage you’re in, but also the market you’re in. In some markets you need to grow fast in order to be successful, in other markets you don’t. Financing is a choice, and when you do decide to find investors, you need to go all the way.”
Paylogic: lessons learned
What about Bart’s own startup journey with Paylogic? “It’s a funny story, because we already had an investor and what became Paylogic was more of a necessity. We were already working on a social platform, which was successful in that it was growing fast, but it didn’t generate money. We already had a VC on board and a bank loan, so we needed to pay the bills and decided to focus on our idea for a ticketing service, which became Paylogic.”
And the fuckups and successes? “Haha, we were young and stubborn and probably fell headfirst into all the pitfalls there are. If I had to choose one fuckup, it would be hiring consultants. When you’re at the stage where you start growing fast, suddenly a lot of freelance consultants came knocking on our door. You’d think that, being older and therefore probably wiser, they have the experience and expertise to help you out. Turns out they didn’t, haha. For us, it was a waste of time and a lot of money.”
And for the biggest success, that would be our exit, selling Paylogic. That’s a funny story too, because we thought we were at that point numerous times and celebrated with drinks and it didn’t happen after all. So the final time, where it actually did happen, we didn’t celebrate it. But that was our biggest success nonetheless.”
You got the highlights here. Feel like diving into the details? Be sure to check out the entire episode.