How to choose your ideal Venture Capital investor

The Spanish entrepreneurial ecosystem is advancing, maturing and becoming more solid year after year. Being an entrepreneur is becoming increasingly attractive, as it has been for many decades in ecosystems such as the American and Israeli ones.

However, the volume of large projects that bet on technology to penetrate and innovate in different markets is not growing at the same pace as the money available to invest in them. The truth is that this rate is much slower.

In Spain, as is well known, there is a great amount of money flowing into Venture Capital funds. This is a great thing for entrepreneurs, since the national goal of no major project going unfunded seems closer than ever. However, this is not good news for Venture Capital investors with a traditional approach.

«Hands-on or die» seems to be the motto that will accompany investors for the next few years. Since entrepreneurship is a challenge, choosing your ideal travel companions is a complicated task. At Swanlaab, we find, with increasing frequency, entrepreneurs facing multiple term-sheets at the same time, and they are the ones who choose their travel companion.

In situations like this, how do you choose the ideal investor? In theory, it’s as simple as choosing the one who can provide the most value. In practice, how do I know? This goes beyond capital and focuses on how an investor can become your traveling companion and help you build a success story. Websites, events, social media and even articles like this one can lead to confusion. However, what is a litmus test are the real stories told in first person by those who chose those fellow travelers back in the day.

What does an entrepreneur value when choosing a travel companion? The answer, as usual, is a resounding «it depends». In Swanlaab’s case, we focus on software startups that create barriers to entry into their industries through technology. For those who like fancy terms, Software Deep-tech. We focus on B2B models, but why? Because that’s where we feel comfortable taking you on the journey. Every investor should know their strengths. Ours are clear. Thanks to our Israeli background and influence, we know well the dynamics of innovative software enterprise and thanks to our entrepreneurial and sales experience, we enjoy creating a sales engine from scratch, transforming startups with powerful technology products into sales machines that have scalability in mind as a priority focus from conception.

It is clear that Swanlaab would not be your ideal, or even interesting, travel companion if you have a large ecommerce project with a B2C focus. Nor if you are developing the future of drones worldwide. We find both sectors exciting and the success stories abound. We simply could not be all hands-on and provide maximum value.

This is something that all entrepreneurs should keep in mind when choosing their ideal investor. An average marriage lasts about 12 years in the United States. A relationship with an investor is about 6. Therefore, the question of whether you want to be «married» to an investor for the life of your company is not a simple one.

A generalist investor with a purely financial focus is doomed to miss out on the best opportunities. Large entrepreneurs are becoming more and more demanding. Spain is no longer that entrepreneurial ecosystem with little capital and few entrepreneurs. Now, there is plenty of national investment money and increasingly blurred borders, with international investors becoming more and more active.

The «Due Diligence» must be at least as strict as the one carried out by the investor towards your startup. This involves talking to everyone in the investor’s sphere, starting with the entrepreneurs with whom he/she has previously «married».