‘Do your homework when looking for investors – don’t just spray and pray’

As Furthr VC ramps up investment in Irish tech start-ups, partner Colm O’Sullivan gives us his advice for entrepreneurs.  

Colm O’Sullivan from Furthr VC sits on a chair in a bright workspace.
Colm O’Sullivan is a partner at Furthr VC, the venture arm of Irish organisation Furthr. Known until recently as DBIC Ventures, it invests in early-stage software and medtech companies.

Earlier this year, Furthr VC grew its seed fund to €32m, with the backing of Enterprise Ireland and Irish tech entrepreneurs and business leaders. In recent months, it has participated in funding rounds for Irish start-ups including 3D Issue, Ronspot, NoFrixion and Everyangle.

O’Sullivan has a decade’s experience in venture capital and private equity, investing in companies across Europe and North America. He spent 10 years in London before returning to Ireland in 2020 and joining Furthr VC. He now sits on the boards of many of its portfolio companies.

In your opinion, which areas of science and technology hold the greatest scope for opportunities?
We see opportunities across all sectors through advances in science and technology. For us, science and technology is an enabler and provides opportunities for founders to build great new and innovative start-ups.

To capture those opportunities requires much more than technology; it requires vision, a strong team and the ability to execute.

What are the qualities of a good founder? Are good entrepreneurs born or can they be made?
A good founder is a visionary with an ability to execute. Very strong communication and motivation skills are essential, including an openness and willingness to listen to others. Resiliency and determination are also key qualities we look for, as well as deep domain knowledge and networks.

Good founders can be made, but generally most strong entrepreneurs have innate characteristics that make them a good founder – for example, strong vision, determination and commercial acumen. Many strong founders create start-ups after spending significant time working for others, however we still tend to see entrepreneurial characteristics from their past.

What does a successful entrepreneur need to do every day? What tools and resources are a must?
Strong communication is a must, both within the organisation itself and with investors. Entrepreneurs should spend as much of their time as possible on where they add the most value and ensure this approach is replicated across the organisation.

There are a million distractions, so focus is key while also keeping the overall strategy in mind and having the ability to step back and see the bigger picture. Building and maintaining a great culture and alignment across the company on its vision is also crucial.

Tools and resources can depend on the industry, but trying to get a good set-up early for essential processes such as pipeline management, budgeting, financial and board reporting is very important.

What is the critical ingredient to start-up success?
The quality of the team and their resiliency is very important. Adaptability and belief in the company’s vision is also critical to success along a journey that will have many ups and downs.

How can founders assemble a good team?
Founders must have the ability to sell a vision that prospective team members buy into. Culture is critical and we encourage the creation of an equity culture through the use of an ESOP (employee share ownership plan).

When hiring, aside from the skillsets and experience required for a role, we encourage founders to place a large emphasis on individuals’ characteristics and cultural fit.

Another key factor when building a diverse team is providing opportunities for rapid progression based on performance, which is different to more hierarchical structures within larger, established organisations.

What advice do you have for founders who are starting to look for investment?
Do your homework and identify investors who could be a fit based on their strategy and approach, don’t just ‘spray and pray’.

Seek to build relationships with potential investors early and ahead of seeking to raise. Early engagement can provide very valuable feedback and a relationship is established before you start fundraising.

It’s important to also network and build relationships with other founders who have been on the journey themselves.

Lastly, make sure you have legal representation from a firm who is very active in the venture capital market so everything can run as smooth as possible on the legal side.

What are the biggest mistakes that founders make?
Ramping up costs too quickly and out of sync with commercial traction.

Seeking to over-optimise on fundraising. It is not all about the valuation; who the investors are and the detail on the financial terms are crucial.

Not spending enough time or resources on sales and marketing, sometimes thinking that if you create a great product that it will sell itself. Product is key, but if you cannot sell then you don’t have a business. Founders need early market engagement to gather feedback to inform product development.

What are your views on mentorship and the qualities one should look for in a mentor?
Mentorship can be very valuable. Having an outside perspective on your business from someone with great, relevant experience can be highly beneficial. Personality fit is key when it comes to mentors; a mentor has to be someone you can click with, trust and communicate openly.

One bit of caution: be careful with your cap table and only consider giving a minor amount of equity to an adviser or mentor if they are meaningfully involved in the business. We have seen founders give away too much equity and that can make it very hard for a company to raise.

What’s the number-one piece of advice you have for entrepreneurs?
Be open, talk to other stakeholders in the ecosystem and learn from the wealth of knowledge out there.

Reach out to us! We’re a highly experienced and founder-friendly institutional investor in early-stage B2B SaaS and medtech start-ups.

Source: SiliconRepublic

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