Investor Daniel Veytsblit discusses investors’ appetite for early stage investing and his tips for raising capital in 2020.
Founders find raising seed capital challenging in the best of times. Throw in the chaos and uncertainty of 2020 and it’s understandable that founders have felt unsure about their raising prospects. So, how have early stage investors responded to investment opportunities during the COVID-19 and how can founders increase their chance of securing quality capital under the current conditions?
Investible’s Investment Director Daniel Veytsblit recently appeared as a guest on digital streaming news channel Ausbiz to talk about investors’ current appetite for early stage investing and his tips for founders who are hoping to raise before the years’ end.
Veytsblit says while both founders and investors need to set realistic expectations, there is reason to be optimistic.
“There’s always an appetite for innovative solutions to large problems.”
“There was obviously a reset in the second quarter around growth expectations. But there is over $1 billion dollars in dry powder that has been raised within the Australian ecosystem and there are investors who are willing to take a long term view and make investments,” he added.
As an example, Veytsblit noted that Investible had invested in five early stage startups over the last quarter and made 25 investments over the last 25 months. He says many investors have remained active through the COVID-19 affected period and that activity is expected to pick up.
“We’ve gone through this period of uncertainty and whenever there’s uncertainty, investors naturally pull back a little, with exception of pockets of innovation and spaces where they see a specific opportunity. Over the next 12 to 18 months, however, a lot of that capital will be deployed and there will be funds raising in the market next year, both toward the middle of the year and in the second half of the year to refill the coffers.”
He acknowledged that while Investible is always looking for great founders who bring a unique competitive advantage to their business, investors do want to see founders taking strategic efforts to extend their cash runway - and if a founder is hoping to raise capital before the December holidays, now is the time to be speaking with investors.
“We always advise founders to allow two to three months to raise capital. If you do want cash in bank pre-Christmas, you need to be speaking with investors by mid-October.”
For founders who are already engaging with investors or who hope to do so early next year, Veytsblit has three important tips.
“The first step is to get the basics right. Show investors that you’ve got the founding team that has a passionate connection to the problem. Next, show your unique competitive advantage. Then, demonstrate that you can plan realistically through this period of uncertainty.”
“Second, don’t plan for any sort of covid-vaccine led recovery. Be conservative. Understand that sales cycles are likely to be longer and be realistic around your projections.”
He also advises founders to consider raising a little extra runway so that you can not only survive the downturn but also put your business in a position to accelerate when conditions improve.
“There is definitely an appetite for the right business and the right founders.”
The Investible group of companies includes various entities who are corporate authorised representatives (CAR) of Boutique Capital Pty Ltd (BCPL) AFSL 508011. The full list of entities are detailed below/via a link.
CAR has taken all reasonable care in producing all the information contained in the website including but not limited to reports, tables, maps, diagrams and photographs. However, CAR will not be responsible for loss or damage arising from the use of this information. The contents of this website should not be used as a substitute for detailed investigations or analysis on any issues or questions the reader wishes to have answered.
You may download the information for your own personal use or to inform others about our materials, but you may not reproduce or modify it without our express permission. To the extent to which this website contains advice it is general advice only and has been prepared by the Company for individuals identified as wholesale investors for the purposes of providing a financial product or financial service, under Section 761G or Section 761GA of the Corporations Act 2001 (Cth).
The information in this website is not intended to be relied upon as advice to investors or potential investors and has been prepared without taking into account personal investment objectives, financial circumstances or particular needs. Recipients of this information are advised to consult their own professional advisers about legal, tax, financial or other matters relevant to the suitability of this information.
Any investment(s) summarised in this website is subject to known and unknown risks, some of which are beyond the control of CAR and their directors, employees, advisers or agents. CAR does not guarantee any particular rate of return or the performance, nor does CAR and its directors personally guarantee the repayment of capital or any particular tax treatment. Past performance is not indicative of future performance.
All investments carry some level of risk, and there is typically a direct relationship between risk and return. We describe what steps we take to mitigate risk (where possible) in the investment documentation, which must be read prior to investing. It is important to note risk cannot be mitigated completely.
Whilst the contents of this website is based on information from sources which CAR considers reliable, its accuracy and completeness cannot be guaranteed. Data is not necessarily audited or independently verified. Any opinions reflect CAR’s judgment at this date and are subject to change. CAR has no obligation to provide revised assessments in the event of changed circumstances. To the extent permitted by law, BCPL, CAR and their directors and employees do not accept any liability for the results of any actions taken or not taken on the basis of information in this website, or for any negligent misstatements, errors or omissions.