In this new edition of the Masterclasses of Managerial Excellence, Laurent Litolff, Investment Director at Malakoff Humanis, shares his valuable advice on how to attract investors and develop strategic synergies with startups. Ready to learn how to sell yourself to an investor?
Corporate Venture Capital fundamentals
Laurent Litolff begins by explaining the concept of corporate venture capital (CVC). For many large companies, CVC involves creating an investment vehicle to financially support startups. The objective? To access new technologies, explore new markets, or strengthen the company’s activities.
However, for Malakoff Humanis, financial profitability is not the only investment criterion. The fund adopts an approach focused on creating synergies with startups, by developing strategic and operational collaborations.
The 4M method for evaluating a start-up
During his presentation, Laurent shares the 4M method he uses to evaluate a startup’s potential:
- Management: “The founding team is at the heart of the company’s development,” he emphasizes. Analyzing the quality and cohesion of the team is paramount.
- Market: The company must address a concrete problem in a sufficiently large market. Laurent emphasizes the need to understand the competition, existing solutions, and customers’ ability to pay.
- Model: The business model must be robust and scalable. “What’s important is that the solution can scale,” he specifies, emphasizing the model’s scalability.
- Momentum: The timing and proof of the company’s traction are essential elements. It must be possible to justify a value proposition validated by strategic clients and partners.
Mistakes to avoid when attracting investors
Laurent also identifies common mistakes made by startups when approaching investors. Among them:
- Not researching the investor: It is essential to understand the investment thesis and areas of interest of the targeted investor. “Approaching an investor who has no interest in the sector concerned can be a waste of time,” he warns.
- Lack of support: Startups that work alone, without support (incubator, accelerator, Advisory Board), struggle to project themselves. Support is a key factor for effectively guiding and coaching the project.
- Excessive optimism: An overly optimistic business plan can harm the company’s credibility. “Investors want to see a realistic business plan,” Laurent reminds us.
- No clear justification for the amount raised: The amount sought must be in line with the company’s real needs.
- Lack of transparency: To establish a relationship of trust with investors, start-ups need to be transparent about their value proposition, stage of development and ambitions.
An effective investment strategy
Laurent emphasizes that beyond simply seeking financial profitability, it is essential for a startup to target investors with similar strategic and operational interests. An effective strategy involves aligning objectives not only with profits but also with improving customer experience and creating operational synergies. During discussions with investors, it is therefore crucial to demonstrate how your project can bring concrete benefits and strengthen existing activities.
He also highlights the importance of these synergies. A good investor not only provides financial support but also offers strategic guidance and a network of partners to help the startup access new markets.
The keys to selling yourself to an investor
As a startup, it is crucial to know how to sell yourself to an investor. Laurent shares the three points he highlights to explain the added value of the Malakoff Humanis fund:
- Understanding the company’s challenges: Clearly presenting Malakoff Humanis’ businesses and challenges helps to identify concrete synergies.
- Showcasing experience and collaborations: By highlighting the 30 current participations and successful collaborations with other start-ups, the fund demonstrates its expertise.
- Leveraging credibility and network: Thanks to its extensive network, Malakoff Humanis acts as a trusted third party, helping start-ups to convince potential partners or customers.
In a nutshell…
This discussion with Laurent Litolff highlighted investors’ expectations and criteria, particularly in the field of corporate venture capital. To convince and attract an investor, leaders must first build a relationship of trust, be transparent about their value proposition, and demonstrate the relevance of strategic synergies.
Don’t miss the next Masterclass!