We are very proud to be financed by one of the best early-stage investors in Germany and Europe, High Tech Gründerfonds. In this article, I summarize my experience from five years of fundraising and show you how you can make it into the one percent that receives funding.
Let me start by saying that we failed several times with financing before Raidboxes. The findings in this article are therefore not necessarily new, but in my opinion they are essential. For us, they have made the difference between multiple failures and a half-million-euro seed investment. Make sure you also take a look at our original HTGF pitch deck.

Capital acquisition only after product market fit

Many founders make the mistake of going in search of capital before they even know whether their product is capable of solving an existing problem in a meaningful way. What a shame! This is because many focus on drawing up business plans and preparing pitch decks without actually having a product that can be financed.

We also made this mistake with our first company and didn't wait for the product market fit. For us, that meant wasting four months of working time. At Raidboxes, we defined 100 paying customers as the limit for our product market fit. Before that, we were practically forbidden to deal with financing.

"You have product market fit, when there is a real emotional connection to your customers"

- Leo Widrich, CMO of Buffer

Leo describes it very aptly with this quote: "The emotional connection is then an expression of the problem-solving power of your idea. At Raidboxes, this point in time manifested itself in the fact that we received fan mail from our customers (honestly, fan mail!) and wanted to send us beer and pizza to the office several times. Such enthusiasm is always a good sign and at the same time very important to grow through word of mouth.

Is there a better indicator of #productmarketfit than customers like these? We don't think so! Thank you, @vitti_de! #WordPress #CMS pic.twitter.com/zDL4ioBvrM

- Raidboxes (@raidboxes) February 9, 2017

If, as a business graduate, you are only surrounded by business graduates, you can't build a good team of founders

In our previous WordPress projects, we always lacked an important component: a CTO who doesn't just work for money, but for the chance to work on something big and develop a great product. In Marcel, we have found exactly that person. Conversely, with Torben (Design & Marketing) and me (Business Administration), Marcel has found exactly the components that he was missing in his previous WordPress projects. We complement each other perfectly as a founding team.

The most important question in this context: How do I find my founding dream team? In the end, we were lucky enough to work together in a coworking space. And we were in the right place at the right time. Each of us had seen the other's work before in different contexts and was therefore able to assess its quality. The insight at this point: Give your luck a boost! Network in the start-up environment, be willing to experiment, seize opportunities and deliver good work to get yourself noticed.

In any case, your team is wrongly staffed if you, as a business graduate, are only surrounded by business graduates. And that's only because they are also interested in founding a company and happened to be sitting in the same lecture as you. First and foremost, this means: start looking, be proactive and leave your comfort zone. Because an investor needs a team that can achieve results on its own and without buying in external services.

Numbers speak louder than words - prove your growth potential in the pitch deck

This point is the sum of the previous two points. If you have managed to build a good team and achieve product market fit together, then you can also demonstrate a certain amount of growth. And that's exactly what you need to do: visualize your successes to date and forecast the future of your product!

Many founders set out with an idea in search of a seed investment. In reality, however, an idea is worth nothing. The wheat is only separated from the chaff once the idea has been implemented. Investors know this too, of course. And presenting a mere idea in the pitch deck will then primarily lead to you showing a potential investor: We don't have any results to show yet.

The TV show "Höhle der Löwen" (Lion's Den) backs up this statement. Here, almost exclusively founders who have already achieved results receive an investment. The absolute result only plays a limited role here. The decisive factor is how growth will develop. As a rule of thumb, sales or user numbers should grow by at least 5 percent per month.

"You have a great product and a great team. But the pitch was sh****!"

All your work - the product development, the team building, the hard work to get the company off the ground - it's all for nothing if you fail at the moment of the pitch. Because you usually only have five minutes.

That's exactly what happened to me during our first pitch at HTGF. The feedback from those present was unanimous: "You have a great product and a great team. But the pitch was sh****!". If our investment manager hadn't thoroughly checked our figures beforehand, we would have been out at this point.

Our core mistake at this point was to not show our traction and simply ignore certain best practices in slide design and presentation techniques. A classic example of this is a competition matrix in which your company (no wonder :-)) is at the top right or a presentation of market potential. At a certain stage, however, it is also worth working on small details in the pitch deck, such as "speaking" slide headings.

Take a look at our original pitch deck for the High Tech Gründerfonds

You can download our pitch deck from May 2016 here. With the original figures. Of course, I've taken out a few points; I've also changed the investment amount. However, 85 percent of the slides are identical to the original pitch. You are welcome to use the structure of the presentation and the slide structure for your own pitch deck. They are based on the HTGF guidelines and general pitch standards.

Conclusion: The focus must be on results

Congratulations! You have made it! In fact, I am very sure that if you do the four points mentioned correctly, you should have no problems finding a seed investment. So make sure that you work out your idea thoroughly and bring it to product market fit, that you have a complementary team that can achieve very good results and that your pitch is the pitch of your life - with real and relevant numbers.

Sounds easy, but it's not 😉 After all, you have to achieve the results first. At the end of the day, financing brings more peace of mind and finally the opportunity to professionalize your work and devote yourself fully to your passion.

Ultimately, however, it is nothing more than a leap of faith. The investor trusts that you will continue to achieve results in the future. And one thing is certain: every investor will turn off the money tap at some point if the results fail to meet the milestones.

With this in mind: Have fun at work and good luck acquiring your half a million euros!

Do you need more material or information on pitching or acquiring investors? Then simply comment on this post.