We kicked off the year with an engaging coffee morning, our first for the year, held in collaboration with Rotermann, part of the Rotermann Talks series. This seminar, titled “The art of raising capital: Strategies and practical solutions,” featured insightful discussions led by Kati Pino, Senior Associate at Hedman, and Karen Burns, Co-Founder and CEO of Fyma, a valued client of ours.
Kati offered in-depth insights into pinpointing suitable investors for startups at different growth stages, detailing the usual terms investors look for when providing capital. Drawing from her rich experience in advising both startups and traditional businesses, she shared practical tips and observations. Her presentation highlighted key areas such as incorporation, document preparation, issuing shares, interacting with shareholders, and granting options, underscoring common pitfalls founders should anticipate and skillfully navigate.
Karen shared invaluable insights from her journey of raising capital for a deeptech company, navigating the diverse investment landscapes of Estonia and the UK. Her insights are made even more poignant by the fact that she has first-hand experience with different cultures, having worked in Estonia, UAE, and now in the UK. Here are some key points from her experience:
- Investor discernment: Avoid being solely influenced by financial offers. If negotiations stagnate or involve manipulation, consider withdrawing.
- Storytelling: Compelling narratives can be effective when numerical data is limited. Use storytelling to engage and persuade.
- Prior commitments: Be mindful of existing obligations, such as agreements with accelerators or grant conditions, as they can impact fundraising.
- Financial instruments knowledge: Understand different funding options like equity investments, SAFEs (Simple Agreement for Future Equity), and convertible loans.
- Persistence: Be prepared for extensive efforts in finding the right investor. It often involves numerous attempts and meetings.
The audience posed numerous in-depth and practical questions to our presenters, drawing inspiration from Karen’s success as both a founder and leader and Kati’s extensive legal expertise. Here are the general takeaways from the session:
- Depending on the company’s stage of development, potential investors range from family and friends to angel investors, accelerator programs, and venture capitalists. If you wish to learn more, here is a more detailed overview.
- In every new investment round, existing investors are of high value due to their familiarity with your business. Furthermore, the fact that existing investors are willing to invest in next rounds functions as a strong positive signal. The shareholders’ agreement may even oblige you to approach existing shareholders first.
- Sometimes investors’ wishes may also be unreasonable. Therefore, offers should be carefully analysed and options considered during negotiations.
- Regulating intellectual property rights is crucial when founding and expanding a company, particularly one developing technological and other innovative solutions. This holds true even when establishing a business with your close friends.
- Startup Estonia together with Estonian law firms has drafted industry-standard legal documents for startups freely accessible here. The templates were last updated in June 2023, with our contribution.
- Regardless of actual profits you have to show, it is of key importance how you manage to present your company and ideas to potential investors. Companies with innovative and actual solutions will always find investors.
Thank you for joining us and we hope to see you at the next Hedman coffee morning!
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