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Interview with Felix Haas: The Smart Way to Collect Investor Capital – How to Get Funding

As co-host of the Bits & Pretzels Festival and a successful founder and investor, Felix Haas spoke with Munich Startup about angel money, VCs and shared what founders should know about startup financing. With investments in more than 100 startups, the founding expert has countless tips to pass on.

Let’s be honest: What mistakes do most startups make when looking for investors? Why is that so?

A lot of startups only start looking for investors when they are in serious need of capital or even running out of money. That’s the main mistake I’ve noticed. My recommendation instead: It’s much better to make sure you remain in continuous contact with investors and to establish genuine relationships. That takes time of course, because good relationships should be maintained, but the constant contact pays off. The clear advantage: When it’s time for the next round of financing, you already know each other. That makes a lot of things much easier!

The second mistake I see time and again: A lot of founders find it difficult to view investors as equal partners and instead get stuck in salesperson-mode. That’s not received well by many investors – because they want to get on board as a partner.

Then there’s one last factor I notice quite often. A lot of founders just blindly or mindlessly talk to different investors at the same time. Those investors are sometimes not even a good match for the company or have a completely different funding model. An investor naturally picks up on that and then word gets around, because the scene is small and people know each other. That then gives the impression that the founder is clueless about which investors are a good match and sends negative signals about the startup.

On top of that, it also costs the founder an immense amount of time and it will basically have all been for nothing. You can avoid wasting that time by conducting some proper research and also by asking around and networking in the scene.

As a founder, why should I get an angel investor on board?

That’s quite clear: Every angel investor has a comprehensive and generally quite valuable network that a founder normally wouldn’t be able to quickly access. That kind of network provides a phenomenal amount of added value and you make more rapid and goal-oriented progress.

Moreover, angel investors usually have personal experience in founding at least one of their own companies that were more or less a success. A founder can naturally benefit from that experience as well and pick up some valuable tips. Then you don’t have to make the same mistakes and can instead competently and specifically avoid some here or there.

And – last but not least – another major added value I see is: angel investors are generally very well networked in the world of institutional VCs and have learned their own lessons. For founders, that means they can become a kind of sparring partner when dealing with VCs as soon as the startup is far enough along to take the next step.

A lot of founders are scared they’ll have to hand their “baby” over to investors too soon. What’s your opinion?

In general, a funding model using borrowed capital is just one option to quickly access money and grow as a company. If a founder has too many reservations, they don’t have to go down that road. Bootstrapping is definitely an alternative to consider and I’ve seen it used successfully time and again. Although everything takes a bit longer, you can keep your baby all to yourself. But also for founders who decide to get investors on board and feel doubtful: It’s also possible to regulate investor relations using the appropriate property rights. That is absolutely legitimate. Good founders generally safeguard themselves and make sure they remain in the driver’s seat and that investors can’t block too much in case of doubt. In my opinion, entrepreneurial freedom should only be minimally restricted – otherwise it becomes difficult as a founder.

If I want to get an investor on board: How can I ideally prepare as a founder?

A decisive factor for a founder is establishing a network. If you can get immersed in the scene that’s important for your own company or industry, that’s a clear advantage. It’s also helpful to talk with founders you’re friends with and to learn from their experience. A lot of startups are in the same position and have gone through similar situations, so it’s a good idea to use the tips they give you about finding investors, meetings and deals. Getting into the scene and talking with other founders both work very well if you know the right events and also participate in them. I go to a few select events each year and most of the investors I know do the same thing.

It’s pretty simple as to why I think that’s so important: At Bits & Pretzels this year, for example, we had more than 300 investors at the event and the founders had easy access to them. It’s of course ideal to have made the effort beforehand to find the right investors and contact them to make an appointment. And even if that doesn’t work, I tell everybody to be proactive and talk to investors at events as well.

At Bits & Pretzels, we try to provide the best opportunities for founders and investors to meet up with each other in the easiest possible way. On one hand, we offer our Startup Pitch or the Startup Exhibition, which investors like to visit, as well as the Matchmaking Area for targeted meetings. On the other hand, there are also extra presentations from investors – for example on the topic of “Finding investors” on the Academy Stage. With Holtzbrinck Ventures, which manages more than a billion euros and has invested in more than 160 startups, the subject is presented by one of the largest and most experienced VCs in Germany. The investors who go to Bits & Pretzels are usually extremely open to discussion because they know from experience that a lot of good founders will be there. To make appointments beforehand, there’s an event app that I would recommend founders use before the event.

Now we have a personal question: Why do you invest in startups? What do you find attractive about it?

I feel it’s an incredible luxury to work together with other motivated and interesting entrepreneurs and to be able to watch them grow. Sharing knowledge, your network and opportunities is extremely satisfying. And in general with the “startup” asset class, I have a much higher average annual return – and that’s naturally a nice result.

About Felix Haas:
Felix Haas is co-host of the Bits & Pretzels Festival, founder of an array of successful startups and is a business angel to more than 100 European and international startups. He lived in Silicon Valley for more than two years and likes to spend his scarce spare time flying.

More information that startup founders absolutely need to know about “Finding investors” will be available at this years’ Bits & Pretzels at the Startup Academy.