Fundraising 2.0: leveraging technology to do the legwork
By: Dr. Yoni Goldwasser
Tags: Investing, Technology, Venture Capital, Startup, Impact

Fundraising is quite inefficient, both for startups and investors. Founders have to run all over town to tell the same story to different people over and over again. Investors need to go through hundreds of pitch decks sent to them without being able to get a good intuition for the people behind the startup. We thought: there must be a better way to manage this. So we came up with an idea….

Fundraising sucks

Fundraising is a (most often) necessary evil in building a new startup. Founders need money to build out their dream and investors are in the business of buying low and selling high. Everyone is trying to minimize their risk.

As a founder, you are looking for investors’ cash and need to get them to a place where they feel comfortable saying “Yes” to you. Throughout this process, you tell your story again and again and again. On the one hand, you get better at telling it. On the other, the time and effort it requires are taken away from your efforts to focus on your product and company, which is the ultimate driver of your success. And despite all the effort, at the end of the day, your reach is still limited: even the hardest working entrepreneurs can only usually target a few dozen investors.

Investors, on their end, don’t love the process either. In larger funds, the dealflow usually passes through the more junior ranks, as the partners can’t possibly spend their days reading through decks. Add to that the tedium of reading materials that start blending into each other, and the inability to get a human “feel” for the founders, and you get a process that investors would also love to improve.

Problems investors have when it comes to finding early stage targets:

Scanning through dozens of pitch decks and one-pagers can be overwhelming and quite tiring. Eventually, it gets hard for startups to stand out. Most investors aim to primarily invest in the people behind the companies, with less focus on the idea itself. However, the pitch decks give you a very poor sense of who the founders actually are. Saying “no” to founders is never easy. It takes an emotional toll, even on the most hardened investors. And despite investors’ best efforts, founders can take the rejection to a very personal place.

Issues startups encounter when looking for funding:

Fundraising can be a very tiring process since you’re basically running around, telling the same story to different people. This is time and energy that you can’t dedicate to building your startup. It’s hard to get the time and attention you feel your pitch deserves. Many investors just never say no, and it’s up to startups to figure out whether they should stay persistent or if they are wasting time on a lead that will never close.

A new way to connect investors and startups

Elevator is our attempt at APX to address all these issues, using an app which gives a short intro to each startup based on 30-second videos. Each one of these clips covers a key aspect: Problem description, solution, traction, team, and a call-to-action. Together with the founders, we ensure the 30-seconds are packed with only the most relevant content. The aim is to be as brief and efficient as possible. Also, we implemented tags (such as funding stage, B2B vs. B2C, or industry), to categorize startups and make the filtering process for investors easier.

After listening to the pitch, if an investor is interested in contacting a startup or staying up to date, they can ‘swipe right’ or ‘bookmark’ it.

Once an investor shows interest, she has the chance to:

…message the startup directly via a chat function to ask questions, set up a meeting, exchange contact info

…get notifications and updates automatically once a startup has reached certain milestones in traction, fundraising, etc.

Right now, our app is being gradually rolled out to investors in the APX network. We have been contacted by investors who asked if we could open up the app to startups and investors outside of our network but we want to ensure a certain quality of startups and investors on our app. Our community is quite inclusive, however, so if you are an investor and interested in the APX portfolio, just write us and we would be happy to grant you access to the app!

In collaboration with Mel Goering