Raising Startup Venture Capital: Lessons from Local Globe and Unmade

Behind the scenes: Robin Kein (left) and Hal Watts (right).

We wanted to get some advice on how to find investment from a venture capital organisation when you’re starting a new tech business. So in the third episode of AWS Startup Stories* we got both sides of the fence in a room to talk. On the venture capital side of things we spoke with the tech VC group, LocalGlobe, and on the startup side we spoke with Unmade, one of the companies they chose to invest in and an AWS customer.
Unmade is a tech-driven fashion brand that lets customers customize the designs of their clothing. Click through to their site and you can visit an online store that lets you use simple drag-and-drop tools to adjust the colour, size, style and pattern of the products they have on offer. The result is tailor-made fashion clothing that’s completely unique to each customer, with each product made to order. That makes them able to both reduce wasted material and keep production speed high. Their technical and creative capabilities have been making waves, and they’ve already won awards in fashion, technology, and design.
On the other side, LocalGlobe is a UK-based venture capital firm focussing on seed investments for burgeoning technology startups. They’ve helped companies like Transferwise, Citymapper, Zoopla and Graze get off the ground and given each of them the support they needed to become the brands they are today.

Unmade’s technology lets you use simple drag-and-drop tools to adjust the pattern of the products they have on offer.

We spoke with Robin Klein, General Partner at LocalGlobe, and Hal Watts, CEO and co-founder of Unmade, to get some insight into raising startup venture capital. You can listen to the full podcast here, and we’ve also summarized some of the key takeaways we heard in those three guiding principles to help startups find the right VC funding.

1. Make the right connections

Before approaching investors, it’s important to secure a strong network within the startup community. Learning how other businesses are positioning themselves in the early stages gives you a huge advantage when it comes to putting a competitive pitch together. Plus a lot of startup founders have experience running previous businesses, so by getting to know as many of them as possible, you’ll be more likely to get inside information on winning VCs.

To secure a network for Unmade, Hal and his team joined Techstars – an accelerator program for promising startups. Over the course of three months, they worked on their product alongside other young businesses, learned to position and pitch the company, and got introduced to willing investors.

‘When we looked for funding we met with enough potential investors that we were able to build some level of competition. Rather than putting ourselves in a situation where we had to say yes to anyone because we needed the cash, we were able to pick the investors we really wanted.’ Hal Watts, CEO and co-founder of Unmade

2. Nail your approach

Startup communities and accelerator programs are great for introductions – but they don’t raise rounds on your behalf. We heard from Robin, there are a few things that startups need to get right to attract funding. The first is the sign of a well-managed team – many startup founders underestimate the importance of good management training, so make sure to get that under your belt. The second is engaging content – investors sometimes have to sit through multiple pitches a day, so don’t just present with a deck. An engaging video of your product goes a long way (as does a real-life product demonstration). The next is being able to ask for large sums of money – this can be daunting at first, so make sure you can backup your valuation and pitch with a healthy amount of confidence.

‘When startups pitch, I don’t want a flat script. I want to hear people talk about who their customer is, why their product is incredible, and how they’re somehow going to change the world.’ Robin Klein, General Partner at LocalGlobe

Robin also told us it’s important to convey integrity – when you talk about your brand at public events and conferences, make sure you’re as honest as possible. Investors appreciate it when startup founders talk about problems they’re experiencing or difficulties they’re anticipating – do that and your positive claims are more likely to be trusted. Finally, make sure conversations with potential investors always have an organic flow – unnatural, rigid dialogues are an instant turn-off.

3. Choose the right investors

‘It’s not an exaggeration to say your choice of funding partner is almost as important as your choice of your founding team. You’re going to live with them for quite a long time and they’ll almost certainly be influential in the key decisions you need to make.’ Robin Klein, General Partner at LocalGlobe

It’s always exciting when you’re a new startup and your first offer comes in. But in the early stages, quality of investment matters just as much as quantity. Good investors will make it clear that they want to work with you in the long-haul – they won’t just throw money at your project and wait for returns. For instance, when Unmade first pitched to LocalGlobe, the first question Robin asked was “how can I add value beyond a pay cheque?” Based on that question alone it was clear to the team that they’d found an investor with an active interest in the company vision.

Although it’s important to find an investor who’ll actively engage in achieving your core business objectives, it’s also important to find someone who’ll let you keep control. Robin’s motto at LocalGlobe is that “the companies we invest in always belong to their founders,” as he wants the startups he works with to have as much freedom as possible. Whatever stage you’re at in your business journey, make sure you keep autonomy a priority.

Final takeaways

There’s no one-size-fits-all approach when it comes to securing VC backing. But there are some key takeaways to keep in mind. First, create a supportive network so you learn from other startups in similar situations and get the first-hand experience in approaching investors. Make sure you’ve got a streamlined approach, a well-managed team, and an honest conversational style. Finally, choose the right people for the job. Money isn’t everything, and if VC backing’s going to drive your business, it’ll need to come from investors who share your vision.

You can listen to the AWS Startup Stories podcast with Robin Klein and Hal Watts here.
And if you’re interested to see what are some of the AWS services that Unmade is using, subscribe to the series and download the cheat sheet here.

*What is AWS Startup Stories?

AWS Startup Stories is a business series of podcasts published on the AWS Podcast channel that showcases the success stories of startups running on AWS. Heroes of each business talk about how they overcame challenges and used technology to solve problems, providing tips for companies facing similar issues. Learn more about the series and who’s part of them on the webpage here and never miss an episode by subscribing today!