As you probably know Atomico released their State Of European Tech report for 2022.
So, Atomico, a venture capital firm, conducted a survey among investors and founders.
The founders identified what were the top factors in choosing investors for their startup, while investors have been asked to identify what helped them to win the deal. These results are very interesting.
What do the founders say?
- 57% said that the most important thing for them is a general understanding of the vision and goals of a startup
- 31% noticed the need for an investor to have a wide network
- 27% wanted to have a “chemistry” with a funding partner in the first place
- 24% were looking into the required industry experience
- 17% of founders selected multiple options:
- go-to-international-markets assistance,
- the brand and reputation of the fund,
- evaluation,
- conditions flexibility of the deal
What do these numbers say to us? Evaluation of a startup is not that important to founders. It gets only the 5th place.
It is worth mentioning that only 7% of founders noticed they chose VC, which was talked with a long time ago (they did value the “investment” of VCs into the building of relationships before the seed round).
The picture is different when we are looking at the data from capitalists.
What do venture capitalists say?
- 48% believe in investing in building relationships with founders first and this has become the key to winning a deal (while founders don’t care about it, as usual)
- 27% rely upon their brand and reputation
- 25% believe their wide network helped them gain the deal
- 23% say that common ground in vision and goals and alignment with the founder has been key
- 22% because of the speed of decision-making and closing the deal
- 20% believe that because of having relevant industry experience
Other numbers are not so significant.
So now we can highlight some curious inconsistencies:
- We can notice that investors overestimate the “investment” in building relationships (48% vs 7%)
- Investors overvalue VC brand (27% vs 22%)
- Investors overvalue a bit closing deal speed (17% vs 15%)
- Investors a bit underestimate the overall understanding of the vision (9% vs 17%)
- Investors heavily underestimate the assistance in go-to-international-markets (23% vs 57%)
And do we have a parity?
- The same understanding of the importance of the evaluation, and conditions of the seed round (16-18%)
- The track record is not as important as the real help in operating activities from VCs means nobody believes in it (9-14%)
- Beautiful stories about sustainability and diversity are fair to middling (3-5%)
An interesting graph. Don’t you think so? Have a look and study the subject of your own expectations and compare it with the benchmarks.
You can find the report itself here: https://stateofeuropeantech.com/