How does the initial contact with an investor work?

The founders of the startup SPACEGOATS tell us how their initial contact with 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 quickly realized how complex that is. If you want to sell internationally, you have to register for tax in the respective country. A process that was not only bureaucratic and expensive for the friends, but also swallowed up an enormous amount of time. Additionally, Amazon's fixed costs for international sellers go quite a bit into the money. The three of them realized that this process was not something that small Amazon shops could handle. The go-ahead for their startup SPACEGOATS. In 2019, they bring Andi on board to the extended founding team and from then on provide their infrastructure to enable other sellers to sell their products via the central SPACEGOATS Amazon account. This eliminates the need for a separate Amazon account and a foreign tax number to expand internationally.

In February 2020, SPACEGOATS received seed funding. SPACEGOATS came to the attention of the High Tech Gründer Fonds (HTGF) through Startbase at the time. We want to talk to the founders about how surprised they were to be contacted by HTGF, how the funding went down, and what has changed for the team since then.

Hello you four, we are looking forward to talking to you. You've taken the problems that plagued yourselves as Amazon sellers and turned them into a scalable business model. It's a storybook startup story. Tell us again what makes SPACEGOATS so special.

We offer small and medium sized product manufacturers and brand owners a way to quickly expand internationally with little effort. And besides the actual selling, we can also take other tasks off our customers' hands. Amazon offers sellers quite a few advantages, such as reach and thus decent traffic. However, Amazon is also a science in itself, i.e. how the algorithm works, what works best with PPC (Pay-Per-Click), how to handle Seller Central and so on. For that, we also refer our clients to our partners who specialize in marketing or PPC, for example.

And then you guys signed up with Startbase as a freshly founded startup. How did that come about?

We joined the platform in 2018. At that time it was still called VentureZphere. We became aware of the platform at the founder barbecue at the Stuttgart Stock Exchange.

High Tech Gründerfonds (HTGF) discovered us through Startbase.

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

We were contacted by an investment manager from HTGF who saw our profile on Startbase. We didn't think too 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 present at the pitch. We were again convincing 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 there as well.

This then got us into due diligence, our company was reviewed from top to bottom. We were given a list with an incredible number of items to go through, from financial to legal and strategies. Then HTGF organized an independent reviewer, a former Amazon employee who knows Amazon and the culture. He came to us and signed off on it. Then the deal was fixed, and after the notary appointment, the money came.

That sounds like a lot of work. How stressful was the process and how long did it take in total 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 due to the fact that this was a seed or better pre-seed round. The due diligence is not as detailed as in a Series A, for example.

Don't artificially calculate your figures, but don't make them too low either.

Do you guys have any tips for other founders for the due diligence process? What should you be prepared for, what should you look out for?

Be honest. Always! Don't artificially make your numbers look good, but don't make them look bad either. Anything else will fall on your feet later argumentatively.

Also, the DD comes up with an extremely large number of detailed questions that you couldn't have imagined all beforehand. Everything about a company in general and your own approach will be asked. For this you should present a plan for each area, also for example for marketing. This takes a relatively long time, but it is worth it. So you should definitely not try to save time at this point!

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

Make sales! That's what attracts investors. So focus on generating sales and acquiring customers. Learn as much as you can, then go out and find investors. Also, a lot of time needs to go into pitch preparation: Get a pitch coach and a designer who knows pitch decks.

SPACEGOATS

These are really great insights and tips you guys are giving us here. And many founders who are just at the point where you were at the beginning of the year will surely read this with great interest. Thank you very much! Of course, we're now also interested in what has changed for you since the funding? And where you guys are headed.

The funding from our investor has allowed us to build a first real product from the prototype and set up real operational structures. We've built a real company from a test pad. In three years we don't want to be a tech startup anymore, but a tech company. And one that provides its own platform that allows people to sell their products worldwide - and provides all the services needed to do so.

This sounds really very promising. We're excited to follow your journey. There is one small thing we are very interested in: Your name SPACEGOATS (German: Weltraumziegen) is very special, why SPACEGOATS?

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

It really is! And we wish you continued galactic success in your endeavor!


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