Despite an inflationary and uncertain economic environment, French startups, driven by tech, have set an investment record of €8.4 billion raised in the first half of 2022. The apparent dynamism of the tech sector is nevertheless marked by the current global environment, which calls into question the valuations of startups and pushes investment funds to review their strategies. In addition, the competitive environment for startups is fierce, and in order to emerge, they have to work hard to convince funds that their company is worth financing. Fundraising becomes a precious asset, motivated by the search for profitability for investors. So, what strategies should you adopt as an innovative project owner to attract capital?
Have a solid project
Entrepreneurship is a real obstacle course, from the idea to the conceptualization, the crucial moment remains the fundraising. In 2021, 784 fundraising operations were conducted in French Tech. For startups with strong innovation potential, obtaining this capital is essential to evolve as a company and meet goals ranging from product development to international expansion. When it comes to raising funds, it is critical for founders to understand what makes investors feel secure, especially in an uncertain economic environment. You have to master your project and know all the ins and outs. The priority is to be able to effectively demonstrate the ambitions and successes that can result from the project. To conduct this meeting game, the argument must be structured. You must methodically organize your approach with the investor and take into account the elements that will hold his attention when making a decision.
From the first “pitch deck” phase, which consists of a 10 to 15 slide presentation of the project, the founder must present a solid and successful project. Investors, who see hundreds of presentation files per week, are looking above all for the profitability and financial sustainability of an idea. For them, who spend on average less than 4 minutes reading a pitch deck, the company’s presentation must be both short and impactful. This first step is a filter for VCs, which in the best cases, leads to a meeting later on for the founders. Because investors are becoming more demanding, you have to redouble your efforts by structuring your written and oral approach. It is by following this logic that a founder can demonstrate his knowledge of the sector, the market opportunities, the profitability and the risks related to the business in which he will operate. So, how can founders anticipate and effectively adapt their fundraising strategies?
Analyze, anticipate and adapt your fundraising strategy
French Tech is a springboard for the future that can offer international exposure to startups, but it has also become an ultra-competitive environment. Some sectors of activity are more dynamic and receive more investment than others, such as Fintech for example. For others, whose subjects are more technical and technologies more disruptive, such as in industry or deeptech, fundraising is an even more challenging task. Founders must be aware of the multiple issues that surround a fundraising to implement an effective strategy. In the current economic context, capital is becoming scarce and the focus is on the profitability of a project. It is important to raise funds when you can, not only when you have to, and to seize solid financing and support opportunities are essential to the development of a start-up.
To be strategic, the project must be as concrete as possible through forecasts, data, personal commitments and references that will enrich the argument. In addition, to perfect the pitch and its presentation, there are a multitude of tools available to entrepreneurs to improve the quality of the presentation of their startups: online platform, dedicated conferences, associations and examples of pitch deck. In addition, the tech ecosystem is increasingly covered by international media, which gives founders the opportunity to build a strategy adapted to the surrounding economic context. All of these elements make investors even more demanding in terms of the quality of the presentations developed and the choice of their investments.
To continue to raise funds in 2022, despite the current economic context, entrepreneurs must demonstrate knowledge, adaptability and a real idea for their market. The tech ecosystem is facing multiple challenges, such as talent recruitment, scarcer capital and more thoughtful valuations. A set of elements that you need to be aware of, to demonstrate your value to investors.