Dec. 28, 2020

Using referral networks and how to get intros to investors. By Martijn De Wever

Using referral networks and how to get intros to investors. By Martijn De Wever

Martijn De Wever, CEO & Founder of Force Over Mass and Floww, talks about using (and building) referral networks and getting warm introductions to investors you've never met before. Martijn also talks about his experience of raising money during COVID and his advice to founders who want to raise money soon.


Martijn's LinkedIn: https://www.linkedin.com/in/martijndewever/

Floww: https://www.floww.io/products/

Force Over Mass: http://www.fomcap.com/

If you would like to learn more about Floww here is an article about it: https://techcrunch.com/2020/12/01/floww-raises-6-7m-for-its-data-driven-marketplace-matching-founders-with-investors-based-on-merit/

Transcript

Oh, by the way last thing, if you say something, you don't really want to go public or like, if I ask you some of that question, just let me know I'll cut that part out and nobody will ever know it existed. Right?

And go for it. Yeah. Perfect. All right. Cool. Let's get started.

And today's a guest speaker, we have morning to Weaver CEO and founder of force over mess and also the CEO and founder of flow that recently raised around. And today we'll talk about that round.

We'll also talk about force over mass because it's the investment fund. And we'll talk how both of those companies go together so morning, let's kick it off by giving us some background on yourself and on flow and on.

Yeah, yeah, listen, thanks for. Thanks for having me.

It it is a little bit strange of sitting sitting in front of somebody that is a VC. And also, as a, as a tech company.

I guess, you know, sometimes people set up tech companies and they end up at a VC firm or start a VC around the other way around.

I saw the VC firm here in the UK and then.

And then, after that, I decided actually to start a tech company, which sort of the whole idea actually came to light while setting up the VC business, a little bit of my background.

And traditionally, I come from the banking side and I was afraid to for years.
Uh, here in London and derivative some bonds, 13, 9, besides the guy, that's that's enough of that.

Let's do something entrepreneurial want to set up a tech company so an opportunity to set up a VC firm, which grew out to several different funds is actually big fun closing.

That happened just about it will be getting in the beginning of the year.

And then I realized that it wasn't the same that that was used to walls being a traitor. I didn't have any screens with data flowing.

Uh, it's making investment decisions. Everything is all still pretty old school with emails.

And spreadsheets and financial models and decks, and et cetera, and you become these huge administrative type of organization and that problem combined with a couple of our problems that I realized were embedded within the ecosystem.

And I thought it was an interesting problem actually, to attack and say, okay, listen, there must be a better way how we can actually engage with startups.

Where everything is drag and drop, and the data gets checked with your accountant, so that we can help to start getting there and getting the right shape and then communicate to all the vc's. I think a lot of foreigners struggle actually, it's getting from from the right receipt.

They need to have this network to be part of a network and as it got a problem that we're addressing here by saying, no, you know, what we need to do is solve the capacity issue. The VC.

And when we have solve the capacity issue, they can handle more deal flow. And then we plug that the flow straight into the application.

So that's very briefly, in a nutshell, what float with us it's an application for productivity for both the startup and the VC have separate applications.

And those 2 applications are actually working in conjunction with each other so that 1 can say, oh, yeah, I want you to have a look at my.

What do you think? And then the VC on this Tara and come back and say, oh, that sounds interesting. Let me push it to reveal.

A deal flow process, which is completely within the software, and even the reporting to be base.

So, it's cool and exciting, exciting journey for both, but these businesses completely different kind of problems that we're addressing there, but that's that's her job as an entrepreneur, right?

Right. That's very true. Actually. So, 1st, let's talk a little bit more about mass over.

Over over mass I kind of my sentence there cut off a little bit. So let's talk a little bit more about force over mess standard questions. What sectors do invest in? What's each? And what's the average size?

So 1st, off from us is different funds scenario are C, funds that obviously investment stages and there's a big growth fund.

Uh, that sits on the sits on top of it. The check size is on the seed funds are around 100000 dollars a little bit more.

And the growth funds, investment in 4M dollars for investment.

For now the finance folks on on the European market, be to be.

Mostly companies who can tech UK, for instance, a big thing.

A SAS type of businesses right? So very be to be focused in that sense. The fund has done.

I think 70 investments already so quite a sizable number of companies that we've invested in and yet a lot of the deal.

So, we are in Europe, maybe in the future, we can roll this out in the US as well, which would be very exciting journey to do better. So what we do this for several months. We're just I'm a big Physic fan.

Hence the name for server last equation. 2nd, law of Newton. You get a different shade yourself a little bit right? So, that's where it got. Nice. Nice. So, actually, let's let's talk about that a little bit.

So, you're based in Europe. You're investing mainly European companies from what I understood. Why don't you move to the United States?

Great question, and we discussed the weather a little bit earlier than the others. When I look outside. It's like 4 o'clock in the afternoon over here. It's it's dark. It's wet and it's raining.

I've asked myself the same question constantly wide and then move to the U.

S, clearly, this is the kind of game that he's placed in the US and it may actually may actually, especially with with flow, which just software for VSI community.

That is a typical typical thing that you want to actually roll out to new star plans for that for Q1, start pushing the product in the US.

And then we still start looking into, okay when we started operating from the US, and we need to have

a base over there where to put ourselves.

And how do we get ourselves organized actually, that we can do these 2 areas, Europe and the US efficiently. So, it's definitely on the roadmap I think somewhere somewhere.

Uh,

next year,

hopefully,

when flights are actually flying between them to incontinence,

I'm in a position to actually spend a little bit more time there and start doing a little bit of a Recon and and building out building out the team in the US.

So, definitely something that we are going to do is predominantly for flow for and technology play and maybe maybe we can do the same actually for the funds as well.

Nice nice looking forward to seeing you on the West Coast. Of course, because East Coast. Not gate, whether, or at least not as good as West Coast so yeah.

Waiting to see here on the right coast of Atlanta. So let's talk a little more about flow and specifically about is fun. Green.

So you raise off 7M dollars I believe and the question is how much of that mind did you raise during the call endemic.

It's 5, I think something, something so comparing the 1st, 2 versus the last 5M during the pandemic what are the major differences that you saw there?

I think what you saw a little bit in the beginning is there was this shocker or? I think a lot of.

People were just taking a little step back and and trying to get get a sense of the situation. So obviously.

Your timelines were a little bit more delayed at that particular point in time. Right? So that was. Yeah, there was a sense in the beginning, but.

Uh, on the flip side, the good thing, and it's just that everybody started to realize that the whole digital transformation and.

And all the processes where organizations try to find new tools actually to become more efficient or to do collaboration and a lot of these things we do within flow, that became more important. Right?

So, that process of looking at.
How to do the same thing when people are working remotely. Accelerate it, and then really helped, obviously, in our storyline right? So that a lot of these were looking at their software suite and said, okay,

you know,

we could use actually something,

something where we have the Sierra administration platform for reporting platform,

all the data in 1 solution.

So that you can really see a change in behavior. Not always leave really helps actually putting investor base because the investor base is responding to. Okay. What do I, what kind of medication do I do?

Where do I put my tips sort of speak right? And I think this environment's technology is already the space where we see huge boost in investment in flux.

And then, within that technology brackets sauce type of businesses that are focused on productivity and deep collaboration, which we are.

Uh, became became very, very attractive, so.

Uh, so, yeah, we were in the right space, right? Space at the right time at it. I have seen obviously it can be challenging in its environment and by no means.

It is every easy raising raising funding. It is always a long process and a lot of talking involved and explaining the vision of the company and etc.

Uh, but it's good to see that. Yeah, you can still manage actually to get the regional size done and manufacturers quite a few actually.

And that you needed to jump on Medicaid for it, and what does discuss the next funding ready. So so it's clear that a lot of dry powder out there.

From a lot of funds, but also from family offices and angel investors, and et cetera. I think a lot of people will just want to be.

Increase our exposure to these stock of businesses.

Uh, and obviously that that is very supportive for for the whole market.

You know, the way I see it.

Yeah, in this almost like frightening times.

The start up is perfectly positioned startup and entrepreneurs are very agile and are very reactive. Actually it's a changing environments and yeah, they, they should, they should, they should actually.

You know, make the best out of out of a tough situation that we are currently.

100% that's very correct. And yeah, that's that's the only benefit that startups have. They can move really fast. That's if nothing else. So yeah, definitely. People who are listening to this.

Definitely take advantage of these times to pivot fast and slower competition.

So, we're moving on to the next question, which is still about kind of breaking during the cobit, which was what was basically the major issue that you faced there. Once you started fundraising. You were like, oh, D*** it I did not think it can get that heart.

What was that thing that you thought about that was not supposed to be hard, but it turned out to be

hard during cobit. Yeah, tough question.

Yeah, what is the hardest part? You know, what is always hard these things are always hard. I think you have to be very consistent.

But what was specifically the hardest part? I think there was a periods.

Totally in the beginning where it was a vacuum so there was simply a vacuum and you could.

Practically not get anything done and that was obviously.

It was a little bit around April April May that that there's a couple of months. It was actually very difficult actually to get.

To get a conversation going, and that was simply because people had to reassess the situation. I was lucky enough because there are a whole software solution that we build.
Is to make it easier for a startup actually to engage with the investors.
Whether there are investors actually that are in the platform, like investors.

Or angels that made my life a lot easier, because I could literally showcase.

Slow on flow, so I could have the company on flow and send over just like a smart link actually to an investor and I would click on it and see.

See, all the data that require actually to make an investment decision is beautiful mobile environment, so yeah, that really made made it easier in our case. Right? So.

And I do think there are other founders actually, I think that communication actually, 2 or investor basic consistency in that.

You know,
that really helps,
because in the end of the day,
when people are parking parking with money,

they would like to have some trust that the things are handled with cash and you build trust by being open and transparent about what you're planning to do with it and what state of affairs are about your financial,

and we see that a little bit more over the years.

In the US I guess, over here, the demand for transparency is a bit higher.

But I see transparency and I'm giving.

Insight into into flow as a company. I've always seen that as a way of actually raising money because it is.

Uh, it is a journey, and if you want to bring people to your side of the fence on how you're going to

execute this journey.

Uh, Dennis is very good actually, to be very open up. This is what we're gonna do. This is what the financials are. These are the expectations that we have.

Even if they changed during the journey, because everybody knows at the start up.

You have to change and test things out and socialize pricing models and strategies and et cetera until you finalize them all and get it. Right.

But as long as you're open, and with your investor base about that, and how you're doing it and what you're seeing in the market and user testing, and et cetera.

You know, then you get the call from this from people to say, okay yeah, I want to complete the story. Yeah.

That's that's actually very important. Even though you said that in us. This transparency is not as crucial as in the UK. I think that's actually not. Sure. It's crucial. Literally. Everywhere. We go live once. You're done. That's it. So very, very concerned. The more open.

Your better if there's something not good with your company.

Just put it out there, discuss it, you know, see how you can come up with a solution because 1 day is going to come up and the investor will not. I agree. Yeah, you work with. So, that's that's the thing I urge everyone to do.

Because somehow people still, I think it's because of the shows, but somehow people are trying to hide some stuff and they normally it's not it's a strength, right? Yeah, I think it's a strength.

We all know that and this is going to businesses and you're going to go through periods where things are going to be slightly more difficult, because she's trying to figure out things.

The more transparent, more transparent we are in a journey, I think. Yeah. The more successful you're going to be as an entrepreneur.

100% transparency is key, literally reading and pretty much every single book about business entrepreneurship and everything like that. All right so 1 more question about the flow, and we'll move on to next topic.

So you mentioned earlier that, you know, flow has the part of it that works with the.

That kind of builds the referral network, right? For the founders to get those referrals to investors more easily.

Great. So, can you tell us a little bit more about how that works?

Yeah, it's actually a realization of the real problems. So so, yeah, I was in a locked in position to have started the fund the VC firm.

And if you think about the constitution of most VC firms is they have a relative small group of people that are making an assessment. Actually. Okay. Where do we put some money race in? What companies do we do that?

So, how do they do that is by analyzing a subset of the start ups throughout the year? So, let's say it's a 1000 or something like that and on demand.

And that is done on a case by case basis, which basically means that they look at the look, maybe at

some financials, and then bring it forward in the investment committee to have further discussions and due diligence.

And because this is in the case by case basis, and every single opportunities being assessed.

It kind of means you have this capacity issue.

Uh, where you just don't have enough humans, so actually analyze all these incoming incoming deals.

So, what tends to happen and I noticed myself, for instance, you get a huge amount of LinkedIn requests and emails and etc, and peoples don't see that in the forest anymore.

So instead of actually focusing on the solution, where we said going now, we need to plug people in it would only increase the number of deals actually going into these parties. And again we would have the same issue. Right?

Where where a lot of people will be ignored by VC firms, handle the volume.

So, what we said is that now we need to focus really on this multiple neck where it doesn't flow smoothly actually, through this.

So, what we did is we focus really on a capacity issues on how can we actually lift that capacity and, and make them in a position where they can see and process opportunities, much faster.

Because, in most cases, people have a mandate, and I want to focus on 1 area or stage or ticket size or something else that actually is their mandate to invest in particular companies. Right?

So, what we have done is we basically have 2 different applications, the VC application, where they can do pretty much run a whole fund administration.

And the complexities around that, and the currency for your funds, all that kind of complexity that can diminish the complete end to end experience also for these.

So, they are on that platform already, and then we plug into that same platform. Any startup that would like to be connected with that party.

So, the chance of actually being ignored is a lot less before that company comes in the company goes to a funnel where we have real accountants, helping them out and checking actually that data and seeing where the mistakes are.

So that the company actually looks good before you engage is actually the VC.

The flip side of that as well, is that the speed of which you can make the assessment whether that is the right stage and the right company for them increases and therefore the chance that you're being reviewed as much higher.

So, we really focus actually of the underlying problem. Why there is a referral network.

Because the razor referral network, simply for a reason because of capacity, not because of bias.

It is simply because the volume, the sheer volume of companies that actually need funding cannot be handled actually, by, by the VCs that are in the market, they I don't have enough human human bodies actually to deal with that.

So, that is so really focusing on the core of the issue, which is we need all the start ups we represented in the best, possible way.

Uh, because then you have the best success, actually of getting fun.

And how do we do that by actually having away from a lot of technological solutions to the processing? Very efficiently.

We plug in real humans, which are accountants and content writers to make sure that your kind of pitch.

It's, it's, it's super smooth with the data that the VC requires actually to make that judgment call.

Right. Sounds pretty cool. And by the way I'll make sure to leave the link to flow in the description episode as well as a link to force over mess. Even though most of my listeners are in the States awhile, Martin is based in the.

I'm pretty sure there is some overlap like like, flow. We're definitely pushing in the US. Right? So that that is starting in the next year.

Next year we're going to roll that out or start pushing in the US, so definitely on the flow side.

Fun side, you're being based fund, but on the flow, which is by the way, just make a slightly different than the rest but flow is definitely it's a global infrastructure. So we spent 4 years actually building it.

I've made will, and it will be actually rolled out who we're speaking to clients all over the world. And of course, the US.

Is a core market given the venture capital was.
Yeah, there's such a long history with venture capital.

In the USA, that's a big market where we're going to make a big push. A 100%. I'm pretty sure I took a quick look at flow yesterday and it did look pretty cool. I also I'm going to talk to you later on about the pricing how we can work with us, but that looks really cool. Anyhow.

Now we're moving on to the last.

Section of our discussion today I guess 1st question of that section is going to be you are also an angel investor. So what do you personal like to invest in.

Yeah, I made quite a few angel investments.

Yeah, I personally have always yeah, I like to think take opportunities being an extra.

Uh, so so that has always been something that I get I can get excited about.

B, to B, to B or B to B to C type of models because they scale very well also the way I designed a flow myself.

So, as a business model, I think that's a that's a clever way of actually being able to scale fast. And has always been in something.
Which is a difficult 1 because everything is and we have also some I actually in there.

But is a broader kind of broader John there's something really interesting stuff that is actually coming out there, but yeah, it changes, you know, there's so many brilliant ideas and so many interesting kind of concepts.

That are companies that are created every single day so there's a lot to be excited on the run. I think it's very people thing, investing people and passion and excitement that people have trying to solve a problem.

And as long as that is there yeah, you're hiring. People are writing investable.

Right. Sounds pretty cool. And yes, it does seem to pretty, pretty much everywhere question about. I think we discussed this earlier slightly.

But, you know, when founders speech to you as an individual and your investor, or when they pitch to you as the founder of the fund, what do you think is the major mistake that they're making.

Usually the biggest mistake, I guess, um.

The biggest mistake of because sometimes Meg is in their own stuff and I need to know your own stuff. Yeah.

If you have a particular business in a particular demographic, you need.

You need to demonstrate idea, thought about all the different angles I think, for me, that, that is always.

Very early on people have not spent enough time. Excuse me analyzing their own problem, but they're trying to resolve.

And all the calculations back to you at your notes that quite quickly, having said that.

It takes time actually to analyze a problem. So, and you and you learn from feedback. So I never see it as a negative, but it could be the case that.

Somebody is just not ready actually, for that stage for that funding stage, which is, which is different.

Because I do believe that if you want to figure something out, we need to go through different iterations of that and trying to figure out. Okay.

How do we solve this problem? And the best way to do that is to speak to people that are in the business of investing companies that want to solve problems. Right? So so there's all socializing that of a concept.

Uh, with somebody else, as long as there's a very clear and open kind of discussion, I think.

It's never going negative, but I think could obviously, if you're you're raising funding, if you want to get it done.

Yeah, then then that's the whole kind of probably she has to be has to be crystallized and you have to have all the data and.

To present the argument that's actually on what you're trying to achieve. I think that for me, that is key thing.

If you don't know something, which we all do, I think the key thing is as well as some, I'll try to dive around it and find ways to avoid. It is be very clear. This is an interesting viewpoint.

Something we looked at and I think, yeah, because it's a long term relationship. You build with the founders.

And it is all about, do you want to work together with somebody? Do they share that passion? You want to make a.

And making shows dreams a reality, right? So.

Um, so, yeah, so, for me on a see, and clarity are are are super important actually, in funding cycle.

Mm, right? All right now we're moving on to the lasting questions of today's episodes and.

1 of them is the recent thing I've, it is just because pretty much every single investor has some.

Really fun story there. So question is what is the craziest idea that you were ever pitched? So, what's the craziest idea you've heard in the startup world?

Oh, my God. Yeah.

Well, this is a difficult 1. what is the create? Something really, really weird. Something that's that's a good question.

So there's 4 and 3 I'm trying to figure out I forgot to send it to you in advance. So now you have to absolutely crazy.

Crazy concepts. God while you're, I'll tell my own story here. I'm giving you time here. Okay so take date that time.

Think about your own story? All right. So, but the idea that, okay, I haven't heard it personally, but the founder of the venture CDO, I worked for, he told me that story. So basically the founder invented the chip that you have to put on your skin on your chest.

Every time you face towards North, you small electric shock.

And my boss was like, okay, what, what is that? And the guy was like, no way after getting electrocuted 100 times, your body will know where North is.

No, that that was it. I like.

As you say, wow, that is very funny on that note. Actually, I did have.

You know, 1 of the partners in the VC for.

You know, he was trying out 1 of these devices.

For bad habits, and it was in the infancy stages of the devices, so yeah, no, no, but this is the funny thing, right. Say in the middle band.

And you would imagine, okay, what, you can Pre program it on your phone next to me on bad behavior doesn't get a shot.

But then these days you have to yourself, give yourself press that button to give yourself the swap. Wait wait, for me, was he was the kind of person actually that that would actually do that.
But, yeah, now that you mentioned this 1 that for me, actually pretty well.
Um, another 1 that I really, really, really liked.

And then this is studio, I really like the guy great entrepreneur. Fantastic entrepreneur and they sold

these funny looking, sleeping, sleeping bags and they were called.

And it's a kind of a thing that you do over your head.

And you put your arms in these sleeves and it live insanely find it.

And because it looks insane. Me funny. The many hundreds of thousands of people are buying them as a guide.

But it was like, this weird kind of thing that we still have a whole batch of faith in the office, because Super, very successful market there as well.

That's yeah, I can't remember it was out of studio. I think it's called them anonymously or something like that.

But I became a big hit because it was so funny. So it's almost like you create a product where you say, okay, this is good for sleeping.

It wasn't very comfortable actually for sleeping in it, like a complete cloud, but that actually made a really, really sellable. So, I really like that.

Because there is this brilliantly democratize that product. Nice. I'm, I'm, I'm more into that previous story of your partner just literally electric.

He's still shocking himself, but that was verified. Let's say you needed there.

All right on this position that we're moving onto a last question of today's app is a, which is a call to action. So, what's the 1 thing you want to do? As soon as the episode is over?

Well, I register at W W dot Florida and I. O. w's. Like I said, we're going to make a big push in the US. We're adding vc's constantly exceeds to the network. There's a big queue opportunity that we are doing over here and.

So, yeah, that's going to be super exciting people in that. Their profile completely the health check done by our accountants, etc. It's, it's a freemium model. So it's free.

And it, it looks, it looks absolutely beautiful. And I use it personally as well to communicate to all my angels and I really like it because it looks clean.

People are going to follow our company much nicer. I sound as a call to action. Definitely register and I'm super pumped actually to start running out the product for her in the US.

Perfect, yeah, I'll make sure to leave those links in the description to this episode.

We can I'll be willing to flow to force over mass and also to Morgan's LinkedIn just in case you want to ask some additional questions, or you just want to follow him and see what he has else to say and yeah.

That's going to be my give me go to the description of this episode, check out the links that I left there and yeah. Check out the flow.

It's usually.