Incubator helps startup founders for investor day
An introduction of a leading incubator in the Italian scene
Grownnectia is a recently born incubator in Italy and has achieved considerable success.
Let’s meet Massimo Ciaglia from the incubator of Grownnectia!
Massimo Ciaglia, serial startup founder with an exit in America, today supports startups with Grownnectia. In particular, he assists future enteprenours in the evaluation of the pre-money, in fundraising and investor day.
The incubator of Grownnectia accompanies incubated or accelerated startups up to raising capital. What is the pre-seed phase approach to bring startups in front of investors? And how do you help those who leave the acceleration program to raise capital?
Our pre-acceleration path, called PAY4GROWTH® PRE-SEED, lasts 6 months and consists of 6 main phases, which allow us to accompany the startup founders that we take under our wing until the finish line of the pitch day.
The first important phase consists in the definition of the strategy and the creation of the digital identity, which – as far as our path is concerned – ends after a month of work. During the second month, however, you can dedicate yourself to the delicate validation phase, working on the customer problem fit and the problem solution fit.
The next phase is that of experimentation, which leads to the development of the MVF (Minimum Viable Funnel) and the MVP (Minimum Viable Product), to then continue with the establishment of the startup and the validation of the business model. The development of a business plan is the next step.
The last two months of the path include the creation of an AAARRR funnel, to trigger a first lead generation, and then conclude with the study of fundraising strategies to introduce the startup to investors with a validated business model and a first traction.
The most deserving startups that leave our programs have the great opportunity to participate to the Pitch Day, the event organized by Grownnectia to allow startup founders to introduce themselves directly to our network.
Recently, we have also developed an ad hoc service for startups wishing to find funds through the opportunities offered by subsidized finance, helping startup founders to prepare everything necessary to participate in invitations to tender and obtain non-repayable contributions and tax incentives.
Which methods do you use for pre-money valuation?
The main valuation methods we use are the Scorecard Method, the Check-list Method, the VC Method, the Discounted Cash Flow with Long Term Growth and the DCF Method.
Our team of expert Advisors can evaluate the pros and cons of each method and help startups to choose the best one for their case and have a pre-money valuation that is as precise and realistic as possible. We generally consider three or more methods.
We know that fundraising channels progress at the same pace as the development stages of the startup. What are the TRL and IRL?
The Technology Readiness Level (TRL) indicates an evaluation scale used to establish the degree of technological maturity reached by the product. The TRL is now used as a metric for assessing the degree of technological maturity of a product or process within the European Commission’s Horizon 2020 programs. It is based on a scale of values from 1 to 9, where 1 is the lowest (basic research) and 9 the highest (first production).
The IRL – Investment Readiness Level measures the level of consistent growth of an innovation project and considers the parameters used by financiers when evaluating an investment. IRL is a measurement system devised by Steve Blank. Also based on a scale of values ranging from 1 to 9, where 1 is the lowest and 9 the highest.
These two aspects are of fundamental importance for a correct evaluation of a startup by investors.
When a startup is ready for fundraising? How to approach business angels?
A startup is ready when it has a structured team, a validated product and a first traction. It must also have the necessary documents to introduce itself, i.e., an investor deck and a well-done pitch. I always recommend using professionals to prepare the deck, because the quality of the work is completely different as well as the authority of the data presented.
Do you want to tell us what are the types of investments and rounds?
The types of investors that a startup can turn to during its life cycle to be financed are:
- Family, Friends and Fools (FFF) or Incubators with specific rounds that usually vary from da 25.000€ to 150.000€ in a first phase and can also be partially provided in services.
- Business Angel or club deals with rounds between 10.000€ and 250.000€. The sector that benefited the most from these investments was ICT (45%), followed by financial services and distribution.
- Venture Capital with rounds between 500.000 € and €50 million. Generally, Venture Capital funds always invest in co-investments. Venture Capital funds typically take around 5-6 months to sift through each investment opportunity.
- Private Equity with rounds between €5 million and €100 million. They invest in relatively mature companies, startups are not particularly suitable in this case because they prefer to invest in companies with safer returns.
Which books would you suggest deepening the topics of pre-money valuation, Business angel, Venture Capital, IRL and TRL, rounds of financing?
I cannot fail to recommend “Venture Capital and the Finance of Innovation” by A. Metrick & A. Yasuda, while the book “Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist” was written by Brad Feld, the Co-Founder of TechStars.
If you are interested in Grownnectia, please read more on: Incubator founded by Massimo Ciaglia with an exit in America, Incubator of Massimo Ciaglia: becoming a Leader in Europe and Startup Events: “The Startup Academy” cannot be missed!