Exclusive minutes from Propteq Europe 2018 session: Startup to Scaleup: VC, Corporate Investor or Bootstrap?
Attendee: PropTech investment in different countries show various risk profiles. In the UK, EIS is a very interesting investment scheme. There are a lot of private equity, venture capital firms out there looking for startups to invest into, but deal flow is difficult and finding good deal is tricky.
Attendee: As an entrepreneur, the key is to raise capital without giving away too much of your company too quickly. Ideas vs proof of concept: I’ve seen ideas valued at £1 million, but the valuation actually lies in the proof of work.
Attendee: Strategic investors are a good place to start whilst you prove your business model and raise further capital.
Attendee: There is a lot of value in Angel money. In PropTech you need property and technology knowledge and Angels can understand both. The tech investor alone may not understand property and have the right network.
Startup Founder: How can you find funding?
PropTech VC: The most difficult part is the 1st round of funding. Our VC focuses on seed investment but Proptech is a small industry with not many investors or customers. Finding corporate investors is the best. Maybe you can find them at events, but ideally they should be your client.
PropTech Founder: I had a successful exit in 2000. I’ve raised money and scaled the company. I advise to have real estate professionals on the board.
Startup Founder: It can take as long as six months to raise PropTech investment.
What do investors look for?
PropTech VC: Firstly, we look for scalability. The founders need to know their product and have more than just an idea. Secondly, the founder needs to be coachable, if they don’t listen, we don’t invest.
Attendee: Some angel investors have been in technology businesses but never in property, so you could end up getting bad advice. It is important to have someone who is well connected and has experience in order to add value.
Attendee: The problem of having too many different investors is that you end up having too many opinions and different strategies, so you lose independence.
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