PART 3/5
Attendees to the Annual AI & Fundraising Q3 2024 Startup Grind Summit explored alongside Snowflake Ventures, that invests in companies that are committed to mobilizing data and expanding opportunities in the Data Cloud, “KPIs in AI: Product Development, Go-to-Market Strategies, and Operations.”
The traits that make startups successful from a VC perspective were pinpointed.
The Snowflake team examined effective fundraising strategies and explored the opportunities and challenges of integrating AI into businesses. In attendance, Snowflake Ventures Director Harsha Kapre and Phoebe He, Product Marketing Lead, Apps at Snowflake. Snowflake Inc. is headquartered in Bozeman, Montana, and “operates a platform that provides data storage via cloud computing and allows for data analysis and simultaneous access of data sets with minimal latency. It operates on Amazon Web Services, Microsoft Azure, and the Google Cloud Platform.”
Snowflake Ventures Director Harsha Kapre advised from the outset that Founders should look for investors focusing on what you do, for example the pre seed stage or the seed stage.
What are VCs looking for in a nutshell? According to Kapre;
PRE SEED AND SEED STAGE- “VCs seek teams that have a good industry background, exits, they are not looking for customer traction, they are looking for the promise of traction and customer interest.”
We wonder at Latestsale.com why some angel investors especially in the UK are asking start ups for full sales cycles and substantial revenue figures at this stage in their business venture?
EARLY STAGE- According to Kapre, at this stage “VCs are looking for customer traction and signs of life.”
Can the VC help accelerate traction, is the VC a good match with what is required from the start up? These are the critical considerations at this stage.
LATE STAGE- Kapre asserts “VCs look for good market fit, execution, operational efficiency, and ask themselves if their assistance will help the start up to scale and build teams.”
In all cases Kapre encourages Founders to, “Show why you are going to win” and to explain clearly, “What is the problem, highlight why it is a problem, who is there today, what is the opportunity around the problem, highlight competitors, understand them, explain, who will be displaced? Why the startup can do it better must be clarified, what the start up will do differently, why others cannot do the same thing, what is the start up doing that is so unique?”
More considerations for the start up as suggested by Kapre include, “Can you execute and solve operational problems, focus on cost management, operational efficiency and execution, whilst maintaining a customer channel?”
Kapre concludes that Founders must “Explain which of these challenges they have resolved and then indicate where the VC can fill in the gaps.”
How does Snowflake Ventures evaluate start ups?
Snowflake Ventures is not a lead investor and therefore will not spearhead any fundraising round. The senior management team is pretty insistent that their funding strategy and priorities revolve around those start ups that can “drive internal initiatives, expand the partner eco system, to push forward the better together story and further the Snowflake mission.”
Start ups who succeed with investment from the Snowflake Ventures fund are therefore more likely to be later stage, perhaps at SERIES A. Expanding the Snowflake partner eco system and encouraging usage of its own products with this investment is key. This VC will definitely want to see good traction and will explore how with the help of the fund this can be accelerated. For the eco system support to be viable, clear use cases are important. These will showcase the value of Snowflake at a technical level with companies focusing on and demonstrating how Snowflake solutions improve with their tech endeavours over time.
Kapre concluded the session to state that “VCs look for competence and understanding of the market from start ups. Founders should state how with VC help the Founder could fill in the why would we fail category.”