Seed round success with Replique: Navigating finding the right investors for a startup
By Alisson Peña in an interview with Max Siebert, Co-Founder of Replique
Embarking on the thrilling ride of startup funding, every entrepreneur knows that securing investment is a pivotal milestone. In this blog post, Max Siebert, Co-founder of our now spin-off Venture Team Replique, shares the challenges, triumphs, and valuable insights gained along the way as they became investor ready, found the perfect investors, and leveraged their strengths. A must-read for anyone seeking to navigate the exciting and unpredictable world of startup funding!
To start off, a look at the current fundraising environment: how difficult is it really to raise a seed round?
Max: Looking back, it is important to consider the different factors that shape fundraising from our setup, company profile, and environment. In the current economic environment, it seems to be way more challenging for startups to raise money than it had been 2 years ago. Business cases are challenged more intensively, for example regarding break-even points. On the one hand, our setup coming from a big corporate BASF, needs at least an explanation. On the other hand, Chemovator has established a very good and growing network of investors, which eases fundraising. Finally, it is the business model which defines the target group of investors. Whereas for example B2B startups with a SaaS model (which is not our business model) benefit from a great investor ecosystem, other business models might not fit into current investment trends. Although fundraising as a newcomer might be challenging due to the lack of prior experience, beginning the journey backed by Chemovator offers a valuable head start.
How did you prepare to become investor ready, as in going out there and actually talking to investors?
Max: First, we began to explore the investor landscape to find the right fit for our business and business model. The second step was to understand their expectations and requirements for investment and to continuously focus our efforts on forming an awesome team, creating traction, and winning customers, building a good business plan, etc. Ultimately, we created a pitch deck. This is a very iterative process, and based on feedback from investors, stakeholders, and friends, we started with a first version and then improved it many times. Some of the iterations even led to a complete pivot of the narrative and deck, which also shows the importance of storytelling and finding the right selling points.
During the financing round, what key aspects of Replique did investors find most compelling? How do you plan to leverage those strengths to further differentiate your startup in the market?
Max: I think we could show a good customer base and that we really have sound knowledge of how to approach the market. Originating from a large corporate we know and understand our customers and what kind of services they find appealing and how they work. And this is what we will keep striving for in the future: delivering quality and a wholesome solution, which is easily consumable by large and small customers. In addition to that we are leveraging our very good partner ecosystem, especially in the field of material science, which many of our competitors completely underestimate or do not have access to.
Can you share some insights on how you found the right investors for Replique? Is there anything specific they bring to the table beyond financial support that can benefit your startup?
Max: Well, the first thing I remember when we talked to STS Ventures (who turned out to become our lead investors), was, that they really “got” our business model from the first pitch on. You sensed a certain “click”. In fact, this was the case for all investors who joined this round or were really interested in Replique. Of course there is more to it than just understanding. You should also look at their positioning. Our investors are happy to support complex B2B business models like ours and bring in certain relations into the German economy plus some support for IT infrastructure, e.g. by offering discounts to providers for their start-ups. And, most importantly besides financial support, they really are excellent sparring partners for us on how to structure and grow our company and business. We also had in-depth and due diligence discussions with some strategic investors, but those require much more time in their decision process, and they are strongly influenced by their mother company’s strategy, which may change faster than you could imagine.
How did Chemovator contribute to your success in attracting investors during the fundraising process? Any specific resources, mentorship, or network connections that helped you gain investor interest and recognition?
Max: Chemovator was a big help in the whole process, starting with getting us investment-ready and providing some great advice both by Entrepreneurs-in-Residence (EIRs) and additional experts. Chemovator also offered a collaborative environment, being around neighbor ventures with whom we could exchange, compare approaches, and pitch decks. As for connections, Chemovator made a big impact. Our lead investor was found and introduced to us by Gati Kalim, Head of portfolio management at Chemovator and it was at Chemovator Demo Day where we met one of our business angels who would ultimately play a very important role in our financing round. So not only the general environment dedicated to finding investors helped, but also the very active support from Chemovator’s portfolio management.
What were the biggest obstacles during the financing round, and how did you overcome them?
Max: Starting a business during two major global crises, namely the pandemic and a war on European soil, caused a lot of uncertainty amongst our customers. We turned these challenges into an opportunity, as our 3D printing platform enables companies to become more resilient by producing decentral and on-demand, without the risk of stocking thousands of parts in warehouses. Another challenge was finding a suitable investor for our business model. It helped to talk to many investors, practicing and sharpening the required investor profile and what we wanted to achieve.
What are the immediate plans to allocate the funds? How will this accelerate Replique’s growth?
Max: We intend to grow our sales team and customer base but also invest more in our product and its features. Furthermore, our goal is to continue to grow our ecosystem and provide our customers with an increasing number of third-party services on our platform. This will ease the implementation of our secure decentralized on-demand manufacturing for our customers with our platform as a single point of contact.
What would you recommend to anyone looking to raise funds in a comparable industry?
Max: I think it makes sense to start looking for investors very early on, so they can see a whole “video” rather than just a snapshot of your developing venture. To find a good investor, you need to have iteration cycles and practice, which requires time. Use every opportunity to pitch (either to customers or to investors). Each interaction helps you to strengthen your storyline for the next pitch.
Last but not least: A customer sales deck and an investor sales deck are completely separate topics, and therefore also need to tell different stories adjusted to the audience and their requirements. So, make sure you don’t mix them up.
What challenges have you faced in your own startup funding journey, and how did you overcome them? Share your thoughts, experiences, and any additional questions you may have in the comments below. Let's continue the conversation and inspire each other on the path to entrepreneurial success!
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