Dan Conner, partner at Ascend Venture Capital helps build startups and has made a career in funding. He shares insights from his careers as an investor in early-stage software companies. As per the statistics 90% of the startups fail. Besides, conner stated that 95% of the applications he reviews are eliminated for regions such as the solution provided by the startup is not quite ordinary. For a startup to make it to the 5% it has to offer groundbreaking solutions to the problem. Sometimes companies amongst that 95 % are working in the sectors that investors have no expertise. Hence reaching to right investor is also crucial. Some startups have already raised more than enough capital stack than a venture capitalist may require.
Conner initially worked as a CFO at FreightWaves, where they struggled to gain traction from a venture capitalist, so they pivoted to data analytics startup. The strategy worked very well as several investors, brokers, shippers, etc. were quite interested in industry news. Currently, he has reviewed 4000 companies and talked to about 100 companies and has received only three newsletters.
Also, he emphasizes the importance of building a rapport with investors months before asking for funding. He suggests reaching out to huge number of investors for making a pitch. Also, treating venture capitalists like one of the early-stage users is critical. Entrepreneurs must mold their idea as per suggestions from investors and bring that to notice. As a venture capitalist he reviews 300 companies per month. Out of which handful are reviewed for staggering amount of time. As investor puts up millions of dollars in a company hence studying about the potential problem the startup is solving becomes blatant. Investors check feasibility and chances of adoption of solutions offered by startups. The chances of failure in early age startups are high as it depends on factors such as team working, assessing the need for a solution for any specific problem, timing for launching the startup, etc.