ASV’s Top 5 Tips For Startups Seeking Strategic Investment

As a strategic VC, we have seen many startups struggle to engage with corporate investors. However, if done right, engaging with strategic investors can be a game-changer for startups looking to grow and scale their business. In this blog post, we will share some tips on how startups can best engage with strategic investors.

1.????Understand the investor's thesis / business use cases: Every strategic investor has a unique investment thesis that guides their investment decisions. Unlike financial VCs, most strategics such as Allstate Strategic Ventures are looking for alignment between the business needs and the startup’s solution. There needs to be a path towards partnership, commercialization, or at least research collaboration offered by the startup. Therefore, it is critical for startups to take time to research and understand the investor's thesis before engaging with the CVC team or the business unit. This will help startups tailor their pitch and make sure they are aligned with the investor's goals and interests.

Strategic investors are looking for startups that can bring value to their own business. They want to see how the startup's technology can be applied within the enterprise’s own technology, operations, products, or services. Startups should be able to clearly articulate how their technology can help solve a problem or create a new opportunity for the investor's business within the first meeting.

2.????When pitching to a strategic investor, startups need to maximize limited time given since they need to show not only the potential for a financial return, but they also need to explain a partnership opportunity or strategic fit within the larger enterprise. To do this, tell a story in a succinct way that communicates clearly what success looks like by using numbers and brief anecdotes.

3.????Focus on existing traction: Strategic investors are often looking for startups that have already achieved some level of traction with large corporations like Allstate. In their pitch, startups should focus on how they will scale in addition to how they have worked with their existing customers. Spending time explaining how engagement and integration process will work is critical. This will make the startup a more attractive partnership opportunity, thereby increasing the likelihood of investment.

4.????Build relationships early: Building relationships with strategic investors and their business partners takes time. Startups should start engaging with strategic investors well before they are actively seeking investment. This can include attending industry events, getting warm introductions, and setting up introductory calls. Building relationships early can help startups build trust with investors and increase the likelihood of securing investment in the future, and for strategic investors, it can introduce your ideas to a business that may take several months to find applications internally and find internal champions across the business.

5.????Be open to feedback: Strategic investors often have deep industry knowledge and can provide valuable feedback to startups. This can help startups improve their product or service and increase their chances of success.

In summation, engaging with strategic investors can be a game-changer for startups looking to grow and scale their business. By understanding the investor's thesis, having a clear value proposition, focusing on traction, building relationships early, and being open to feedback, startups can increase their chances of securing funding and building a successful business.

Thank you for reading the first post of a monthly series where ASV will discuss relevant topics to startups and corporate VCs.