Edvard Boguslavskij, together with Sunstone Capital recently ran a survey with the aim of finding out how Danish founders view venture capitalists and what their needs are, in order to discover what is important when choosing a VC firm.
The survey received 106 responses and provided some very interesting insights. Although this was a survey for Danish startups, because of the similarities in the markets, the majority of these insights can be loosely applied across the Nordics.
Before we delve into the insights, it's important to note who the responses came from in order to place the following results into context.
The majority of responses (37.7%) came from founders aged 25-30, followed by those 36 years+ (29.2%) and 31-35 years (24.5%).
More repeat founders responded than first-time founders (63.2% to 36.8%) and most came from a business background (54.7%) compared to 14.2% from a technical background, with the majority either shipping a product (49.1%) or already scaling with revenue (30.2%).
In short, it's fairly safe to say the sample quality is relatively high with the majority of respondents having a decent amount of experience and insight on building a company and raising capital in Denmark, in fact 67% had previously pitched a VC firm.
What type of VC firm do founders prefer?
A preference for pan-European firms rather than local or regional
33% demonstrated a preference for a pan-European firm compared to 17.9% for local, perhaps indicating the born global mindset that is prevalent in the region. It's also an interesting comment on the local funds, that less than 1 in 5 founders feel they would be the best option. 40.6% expressed no preference on geography.
Specialised theme or thesis driven funds are much preferred over generalists
It can be hard to differentiate yourself as a VC firm, but one of the most effective ways of doing so is by focusing on a particular vertical or thesis. It appears that this also appeals to founders as well, with 54.7% expressing a preference for this type of firm, compared to just 13.2% who preferred generalists.
What value do founders want from their VC firms?
The ability to add value beyond funding
This was easily ranked as the most important criteria for when choosing a VC to work with, this was followed by the reputation of the firms partners and the track record of the VCs portfolio companies. The location of the VC fund was considered the least important followed by the diversity of the firms partner base. This last point is a rather depressing one, as VC firms are less likely to do something about the diversity issues that currently exist if their business is unlikely to be impacted by them.
Network facilitation is particularly important
Beyond providing money, network facilitation was considered to be the most important activity a VC should undertake for their portfolio companies followed by assistance with follow-on funding. For those VC firms looking to gain an edge, founders least expected to receive dedicated in-house support with HR, legal etc or open office hours for founders who need guidance.
Be entrepreneur friendly
This was considered to quite comfortably be the most important quality in a VC firm. This goes a long way to explaining why VC firms are always so keen to press home that they have former entrepreneurs amongst their team and that they 'understand entrepreneurs'. Having an expertise in a particular domain and being authentic were also considered very important qualities. Good news for VCs everywhere: being humble is considered the least important quality to possess.
Word of mouth from other entrepreneurs is valued most
This is the channel of influence VC firms benefit from the most, which is a comforting notion in the sense that in theory, only the best investors will continue to have entrepreneurs working with them. (Although, of course, this unfortunately isn't always the case). Industry events and the firms website were also important considerations.
You can read the full results and report from Edvard's survey and analysis here.