Landis's Cyril Berdugo and Tom Petit Discuss Selecting The Right Investors For Your Startup
Figuring out which investors to partner with is a difficult challenge.
Due diligence in fundraising is a two-way street. A natural part of the venture capital (VC) investment process is a potential investor performing their due diligence on a prospective portfolio company. As an investor looks into your business, you as a founder should diligence the investor’s expertise to assess whether they are the right partner for you in your entrepreneurial journey.
Make the fundraising process as “informal” as possible. Fundraising takes a lot of time and energy. Therefore, to make it as easy as yourself as possible, you should develop relationships with potential investors in your space as early as possible and maintain a continuing, open dialogue regarding fundraising.
Fundraising from venture capital firms is challenging for any startup. Cyril Berdugo and Tom Petit recently completed raising capital from top venture firms such as Signia Venture Partners for their startup, Landis. Landis, a social impact real-estate technology company, aims to create a path for middle-class Americans who currently rent to become homeowners in the future. Their experience raising money for their latest round of funding had them overcome the difficulties of selecting the right partners for their company, as well as not allowing fundraising itself distract from building their business.
Landis cofounders Cyril Berdugo (left) and Tom Petit (right).
Frederick Daso: What was the hardest part about fundraising for Landis?
Cyril Berdugo and Tom Petit: Hardest for us was understanding which investors would make the best long-term partners for Landis. We were lucky to receive interest early on from a broad range of VCs and angel investors. This meant that we could focus our time on understanding what value they would bring to the business. Ultimately, we decided that our investors’ experience in the space and understanding of our business model mattered much more than their size. We’re lucky - we’ve been thrilled the support we’ve received from our investors.
Daso: What was your overall strategy to fundraise from investors, and did you adjust as you went about it, or stick to the plan?
Berdugo and Petit: We’ve never had time to develop much of a plan. Our investors are all contacts from our networks who reached out for casual conversations and asked for the opportunity to invest. The upside is that avoiding a formal pitching process has allowed us to spend much more time on growing the business.
Daso: How did you probe your investor's "experience in the space and understanding of our business model" to determine they were a good fit? How would you recommend other founder's assess an investor's knowledge of their industry?
Berdugo and Petit: We evaluated investors' experience in the space by asking them about their existing portfolio, focussing on PropTech / real estate tech/consumer finance. We could also quickly sense their understanding of our business model by the thoughtfulness of the questions they asked. Every founder should do this!
Daso: You mentioned that avoiding a formal pitching process has "allowed us to spend much more time on growing the business." How can other founders set up their pitching process to build more fluid and informal to avoid taking time away from their business?
Berdugo and Petit: We would recommend that founders have informal conversations early on with great people in the space before they even start thinking about fundraising.
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