How does the initial contact with an investor work?

The founders of the startup SPACEGOATS tell us how their first contact with the High Tech Gründerfonds (HTGF) came about, provide insights into the selection process and tips for founders looking for investors.

The three friends Anton, Manuel and Dimitrios have been selling products on Amazon for years. And wanted to expand internationally with their Amazon store. But they quickly realized how complex it is. If you want to sell internationally, you have to register for tax purposes in the respective country. A process that was not only bureaucratic and expensive for the friends, but also took up an enormous amount of time. In addition, the Amazon fixed costs for international sellers are quite expensive. The three realized that this process could not be managed by small Amazon stores. The starting signal for their start-up SPACEGOATS. In 2019, they brought Andi on board as part of the extended founding team and from then on provided their infrastructure to enable other sellers to sell their products via the central SPACEGOATS Amazon account. This means that you no longer need your own Amazon account or a foreign tax number to expand internationally.

SPACEGOATS received seed funding in February 2020. SPACEGOATS came to the attention of the High Tech Gründer Fonds (HTGF) via Startbase. We would like to talk to the founders about how surprised they were to be contacted by HTGF, how the financing went and what has changed for the team since then.

Hello you four, we are looking forward to talking to you. You've developed a scalable business model from the problems you faced as Amazon sellers. A startup story straight out of a picture book. Tell us again what makes SPACEGOATS so special.

We offer small and medium-sized product manufacturers and brand owners an opportunity to expand internationally quickly with little effort. And in addition to the actual sale, we can also take on other tasks for our customers. Amazon offers sellers some great advantages, such as reach and therefore a lot of traffic. However, Amazon is also a science in itself, i.e. how the algorithm works, what works best with PPC (i.e. pay-per-click), how to handle Seller Central and so on. We also refer our customers to our partners who specialize in marketing and PPC, for example.

And then you registered with Startbase as a newly founded startup. How did that come about?

We've been on the platform since 2018. Back then, it was still called VentureZphere. We became aware of the platform at the founders' barbecue at the Stuttgart Stock Exchange.

High Tech Gründerfonds (HTGF) discovered us via Startbase.

How did you come to the attention of High Tech Gründerfonds?

We were contacted by an HTGF investment manager who saw our profile on Startbase. We didn't think much of it at first because it was a passive contact. However, we liked the first meeting and were invited to a second meeting in Berlin. A partner from HTGF was also there for the pitch. We were able to convince them again and then pitched to the investment committee in Bonn. We were then accepted and three weeks later we were invited again, this time to the final round, where the investors, i.e. the financiers, were also present. That was more of a symbolic thing, but we were able to convince them there too.

As a result, we were included in the due diligence process and our company was checked from top to bottom. We were given a list with an incredible number of points that we had to go through, from financial to legal and strategic. HTGF then organized an independent expert, a former Amazon employee who is familiar with Amazon and its culture. He came to us and signed off on it. Then the deal was finalized and the money arrived after the notary appointment.

That sounds like a lot of work. How stressful was the process and how long did it take overall from the first contact until the money arrived in your account?

It took about 5 to 6 months and was less stressful than expected. But that could also be because it was a seed or rather pre-seed round. The due diligence is not as extensive as for a Series A, for example.

Don't artificially inflate your figures, but don't downplay them either.

Do you have any tips for other founders on the due diligence process? What should one be prepared for, what should one pay attention to?

Be honest. Always! Don't artificially inflate your figures, but don't downplay them either. Everything else will fall on your face later.

In addition, there are a lot of detailed questions in the DD that you couldn't have imagined beforehand. Everything that concerns a company in general and your own approach is asked. You should present a plan for each area, including marketing, for example. This takes a relatively long time, but it is worth it. So you should definitely not try to save time at this point!

What tips would you give to other founders who are also looking for investors?

Make sales! That attracts investors. So focus on generating sales and acquiring customers. Learn as much as you can and then start looking for investors. You also need to spend a lot of time preparing your pitch: Get a pitch coach and a designer who is familiar with pitch decks.

These are really great insights and tips that you are giving us here. And many founders who are just at the point where you were at the beginning of the year will certainly read this with great interest. Thank you very much! Of course, we are also interested in what has changed for you since the financing? And where you want to go.

The funding from our investor has enabled us to turn the prototype into our first real product and set up proper operating structures. We have built a real company from a test stand. In three years' time, we no longer want to be a tech start-up, but a tech company. One that provides its own platform that enables people to sell their products worldwide - and that offers all the services required to do so.

That sounds really promising. We look forward to following your journey. Finally, there's one small thing we'd like to know: your name SPACEGOATS (space goats) is very special, why SPACEGOATS of all things?

Of course, we also offer a special service. The origin of the name is quite simple: GOATS are the astronauts of the animal world, so to speak, they climb through the mountains and want to get to the top, just like our customers and their businesses. And we offer them the space, i.e. SPACE, to take off. That's why we are SPACEGOATS! But it's not just our company name that has a connection to space, our customers also use the Galaxy software to analyze their sales and find the right partner via our SPACE MARKET. That's galactic ;-)

It really is! And we wish you continued galactic success for your project!