The advantages of being an ex-VC start-up founder
Being an ex-VC has certain advantages when it comes to starting your own company (in my case Fitbay) — but probably not the ones you would expect. A lot of people assume that access to capital is a lot easier when you’ve worked in the money business yourself but that’s not true.
I started working at Creandum, a leading Nordic venture capital fund, in 2012 after a 4-year stint at McKinsey & Company in Copenhagen. I joined Creandum because I wanted to get back into the start-up community, which I had left in 2007 after launching an unsuccessful social networking start-up — think Facebook for university students in Denmark. Venture Capital offered a fast track update on the start-up scene as well as great connections to people who ultimately would fund my own start-up.
In the summer of 2013, I decided to pursue a start-up idea that I had been considering for over a year. I transitioned from Investment Manager to “Entrepreneur in Residence” which is a fancy word for working part time for a Venture Capital fund while pursuing your own start-up. I had a great team, a great idea, and a lot of VC/angel connections. Fundraising would be a breeze — or so I thought.
I started fundraising before we even had a product prototype assuming that the team and the “genius” idea would be enough to secure a healthy angel round. It turned out that investors wanted to see a lot more. They wanted to see a product prototype and didn’t believe that our go-to-market strategy would work. We got rejected by a lot of the investors and received some pretty direct feedback. In the beginning it was really frustrating but then we realized that there may be some truth to what they were saying. We ended up pivoting the company.
We eventually secured an angel round led by Jesper Buch who I had never met during my time at Creandum. This was after bootstrapping the business for 6 months, pivoting 1.5 times, and launching our prototype. Our advantage in the process was that we had built a company that “checked all the boxes” for potential angel/seed investors.
It’s important to keep in mind what angel/seed round investors are looking for when evaluating start-ups. They are looking for a well-rounded founder teams trying to solve a big problem in a large market. If you plan to raise capital for your start-up then it’s important that you can check all these boxes early on in the life of your start-up.
During my time at Creandum, I saw a lot of interesting ideas that were rejected because the “basics” weren’t in place. This can be avoided with the right planning/patience when you’re getting your start-up off the ground. Finding a rock star founding team might take a long time but without it you’re significantly reducing your odds of getting funded. The same goes for your idea where some just aren’t “big” enough for VCs.
Finally, remember that timing is everything. If you’re raising to “do” something then you’re likely to be unsuccessful. If you’re raising because you’re already “doing” something then you will be in a better spot. You’re the train — not the VC, so don’t expect them to give you a check to realize some sort of plan. You should already be realizing it.
Good luck and feel free to write me with any questions you might have!
Christian
Have questions or comments?
Tweet me @cwylonis or email me christian@fitbay.com. Let me know how I can be helpful ☺
