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How we chose our first investors

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Jakob Nordfeldt
Jakob Nordfeldt

It's about more than just money.

You only get to choose your first investors once. All things well, you'll be stuck with them for a while, which means you might as well find people you want to work with. For me and the rest of the team, this meant that we needed to find a partner that shared our vision on how to build organizations, and that had a commitment to sustainability that goes beyond the boilerplate VC statements.

In March 2022, we closed our pre-seed round, with BackingMinds coming in as the lead investor. With this post, I wanted to take the chance to give an insight into our reasoning and the process behind the investment round.

How we got in touch with BackingMinds

SLUSH. The bonanza of neon, hubris and hype that together make up Europe's largest startup 'festival'. We were invited as part of the final pitch in the Mastercard Lighthouse program. During the pitch event, Sara Resvik (CEO of BackingMinds) was part of a panel discussing about gender inequality in funding.

This meant that she also watched my 3-minute pitch of Skrym. As I walked off stage, I passed her and she nodded and said "nice." And gave me a term sheet.

Okay, not the term sheet part. But I then reached out to her afterwards and said it would be nice to have a chat and see if there might be opportunities to work together.

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Max, Johanna and me at SLUSH 2021

The process and decision

When I had the first chat with Sara, we were already quite far along in discussions with several angels and a handful of early-stage VC:s. Sara told me they were in the middle of closing a deal and were very busy, but that I should let her know if we needed them to move fast to a decision. When I emailed her two weeks later saying this was the case, Sara said she would connect me to their new investment manager Niklas Thörnestad. I thought this meant they wanted to pull out but in a courteous way.

It was the complete opposite of that. We had a great meeting (not difficult since Niklas is a fantastic guy) and soon after he came back with an offer to do a larger round, but at a higher valuation as well - with the motivation to help us "run a bit faster".

The same evening, we sat down the whole team and discussed the pros and cons, acknowledged the increased pressure that would come from a VC. In the end, there were three factors that guided our decision to enter due diligence with BackingMinds.

  1. Genuine commitment to sustainability in a wider sense than just some synthetic KPI:s.
  2. Clear value-add in terms of e-commerce experience and network.
  3. A shared vision of how you build organizations (by backing minds, not by whacking minds).

Since they were our preferred lead investor we decided to grant them an exclusive two-week due diligence period. This of course meant that we effectively burned our bridges to the other VC:s (no one likes being second choice), but we felt it was worth signaling our commitment to closing a deal.

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Content production day with BackingMinds for announcing the round

Due diligence was fast, smooth and at a fair level. The tech part was outsourced to a guy who was used to doing later stage evaluations, but that helped us gain an understanding of what would be needed from us tech-wise further down the line (e.g. penetration testing and other fun things). The negotiations regarding the Shareholders' Agreement were also rather quick, and we closed the deal in good spirits.

Looking ahead

Given that the market went for a complete nosedive about 6 weeks after we closed the deal, we really don't regret taking in a bit more money than initially planned. It feels great to know that we have a partner that supports our journey, and we can help them grow their portfolio support ecosystem by talking about our needs.

My advice to founders raising their first round is to just keep trying. For me, it was a painful process of rejection upon rejection. I hated it. Until we found prospective investors we actually clicked with - those discussions felt fair, rational and efficient from the first meeting.

For us, that partner was BackingMinds. It might not be the same for you. But our experience was very positive, so I would like to put in a good word for the work they're doing.

A big thank you to our angel investors who topped up the round and who are also great supporters

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