1) The tech venture capital map
The map of the tech venture capital ecosystem of the Netherlands, published by Peak Capital, neatly arranges all Dutch tech ventures by funding category and is regularly updated. “We created the map as a courtesy to startups, to show them which VCs and capital providers are active in the market,” explains Van Mil. “As VCs, we do not clearly communicate what phase we invest in.” The map helps young companies better determine who to approach and when.
2) Funding is not the target, money is
This is an important one, says Van Mil. “Startup founders should realise that getting funded is not a target in itself. There are different ways of finding the money for your company, like a loan from your bank or re-mortgaging your house. We as VCs have an obligation to help clarify the different options. The best option, of course, is to bootstrap your company until you have found your product/market fit, as this has an optimal effect on valuation.”
3) Know when to strike
“Startups need to know in which phase an investor gets involved. Study our map. Peak Capital is a growth investor: don’t pitch to us when you have nothing more than an idea, but do when you have a product/market fit. This doesn’t mean you can’t make yourself known at an earlier stage. It’s why we are located in a co-working space like WeWork: to be approachable. Startup teams ask us a smart question over lunch, and end up on our radar.”
4) The three things investors care for
Van Mil says one of the most intriguing phenomena he comes across is that founders don’t know what VCs look for in startups. “We look at three things: what is your company’s traction, what is the team like and what is the market you want to dominate? After the start of your company you will pivot many times, ending up with a different company than the one you envisioned. With Catawiki we went through four or five business models before we found the auction model. What should not have changed is the market and your team. If it has, your company will not survive.” Remember: traction, team and market.
5) Do not pitch your product
A logical conclusion from insight number 4 is that whatever you do during a pitch at a VC headquarters, do not give a product presentation. “Founders are proud of their innovation and tend to focus their pitch on the product,” says Van Mil. “We might share that enthusiasm but it is not what we invest in, because the product will change. We invest in a team and the potential of a market.”
6) Know thyself
Startups on the hunt for funding should take heed of this ancient Greek maxim. In their case, it means to know the phase they are in. How to determine this? Van Mil advises: “Go talk to your peers. Attend events: listen, learn, compare. There are some great opportunities in Amsterdam, such as StartupFest Europe in May 2016 and Amsterdam Capital Week in September 2016. Visit sessions hosted by accelerators like Rockstart and co-working spaces like WeWork. Go out and get that knowledge.” If you cannot pull yourself away from your computer, then read Brad Feld’s Venture Deals and Van Mil’s personal favourite blog, The Angel VC by Point Nine managing partner Christoph Janz.
7) The hacker, the hustler and the hipster
Van Mil has said it many times in interviews and will again: “There are three personas that should be present in every startup team: the hacker is all about tech; the hipster cares for the product and the hustler is the commercial one. If you want your company to be a baby unicorn like Peak’s participation Catawiki, you need those skills in your team. That’s why we don’t invest in single-founder companies: the one person who can embody all these characteristics is rare but a founding team of two may do the trick – if they cover all three personas, that is.”
8) Don’t be fooled by an angel
Van Mil observes: “There are three types of angels: friends, family and fools. Fools get excited, put in too much money and valuate the budding company too high. Once these founders knock on our door we have to bring down the valuation.” He compares it to the trees in his garden. Startups need time to grow roots, strong enough to hold them upright during their growth when it gets stormy. “It is better to have a steady valuation increase than to skyrocket with a foolish angel. Make sure to have a long-term view. It might call upon creativity to survive, like bootstrapping your company, but will make you flourish in the end.”
9) Choose a VC with syndicates
A venture capital firm that teams up with international VCs has more financial power, openings into other markets and knowledge at hand. “A syndicate adds experience, network and value, which can significantly accelerate a company,” says Van Mil. “The German market was important for our participation StuDocu, and we needed an investor with experience in subscription-based models. That’s why we partnered with the German Point Nine Capital.” In this international landscape, your VC should have the right connections.
10) Go for Amsterdam
When it comes to Amsterdam, Van Mil is straightforward: it is the best place to be for startups, especially in TMT. “When innovating you need to be in an innovative environment,” he says – and Amsterdam has recently been named European Innovation Capital 2016. He adds: “This has always been a city where new things arrived first. If you’re in this market of new things, Amsterdam is where you should be.” We rest our case.
About Peak Capital
Peak Capital has three funds with a total sum of 18 million euros, and three of their ten participations have had an exit (Iens, Radionomy and Nationale Beeldbank). Peak Capital was founded by experienced entrepreneurs, including Johan van Mil and Heleen van Oord, and is backed by founders of companies such as Booking.com, Spil Games and Drukwerkdeal – they know the ropes of starting and accelerating a business. As entrepreneurial investors, the partners of Peak Capital do not prioritise spreadsheets and numbers, but look at the business model, the people behind it and the opportunity to change the business for the better. Peak Capital invests as much with money as it does with smart hands-on experience.