- Czech founders often raise too little funding (average of $100-250k) and give up too much equity (over 20% for some) for their pre-seed rounds compared to other parts of Europe. They also take too long (over 3 months) to raise this initial funding.
- This is due to a lack of experience and knowledge on both the founder and investor sides. Founders lack legal and fundraising know-how, while some investors set unfavorable terms and do not provide expected support.
- As a result, Czech startups are losing out on growth opportunities. Professional investors who take an active role in early-stage funding and provide ongoing support have startups that raise more total
4. These two are simple, right?
Most people saw these founders as Unrealistic, Insane and Destined to fail,
when they were starting.
5. Yet, some people believed in them since the beginning.
Meet Tom Alberg of Madrona Venture Group, who gave a
f
irst check to Je
ff
Bezos back in 1995.
6. Meet Andy Bechtolsheim (founder of Sun) who gave a $100k
f
irst check to
Larry Page and Sergey Brinn in 1998.
8. I was this Unrealistic, Insane and Destined to fail, back in 2011.
With my company, called Brand Embassy. We hated bad customer
customer service. Yet, we were facing bad customer service every single
day. On a phone, face to face or online.
9. So we developed a software for great digital care.
And went out there to get a
f
irst investor that would cover our
development costs. We succeeded, but gave up too much equity. This
investor didn’t help in further fundraising and we spent months buying him
out instead of growing our business.
10. Yet, we raised $7M+, got Fortune 500 customers in 35+ countries,
employed over 130 people and 8 years later, we were fortunate to sell the
company successfully.
11. Since then I have devoted my time to investing and supporting local and
global impact founder community with global ambitions. And I saw
hundreds of other startups having problems with their pre-seed
fundraising.
12. There is a problem with
a pre-seed* funding.
* also often called “FFF”,
f
irst external capital or a super early-stage.
Experienced business angels and VCs typically stay away from super early-
stage rounds. It’s too risky for many and requires too much work.
13. I asked 140+ founder-CEOs in Czechia to have their say. This is what I
found.
14. Czech founders raise too little.
Only 46% raise $250k+
83% serial founders raise $100k+
19. 5 in 10 were in
f
luenced by lack of fundraising knowhow
20. Inexperienced business angels set, often not
knowing, terms that complicate future
fundraising.
Liquidation preferences
Too much equity
Management veto
23. Czech founders give up too much equity
4 in 10 give up
over 20% !!!
3 in 10 give up
10% equity or less
In stark contract with a healthy dilution range between 5-15%!
24. It takes too long to raise
f
irst external capital
50% raise more than 3 months
Only 1 in 4 raise within a month
26. But only too few do….
Only 5 in 10 founders receive some value-add
Only 3 in 10 investors help fundraising more
27. Ins
Many take too much active role in in
f
luencing hiring, requiring hours on
reporting every month, or insisting on taking part in managerial decisions.