Startup Funding: Sietse van de Kerkhof, Investment Manager, STV Saudi Sietse van de Kerkhof, Investment Manager at STV Saudi, on how to differentiate your startup, attract investors, and grow strategically.
By Tamara Pupic
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This article is part of Startup Funding - Investor Insights Every Entrepreneur Needs by Entrepreneur Middle East, a series where the MENA region's leading venture capitalists share practical advice to help founders navigate the challenges of building and scaling a startup.
Sietse van de Kerkhof, Investment Manager at STV Saudi, on how to differentiate your startup, attract investors, and grow strategically.
What are the top 3 things founders should absolutely do when preparing to raise their first round?
Great question, but very tough to answer because there are simply so many elements.
1. First and foremost, know what you are getting into. Fundraising is an art that can be mastered, but requires a deep understanding of what your counterparty is looking for. If you have not raised funding before, talk to someone that has and get their tips and tricks. Nothing beats experience.
2. Secondly, have your ducks in a row. Nothing kills fundraising like a lack of momentum, so make sure that you have your data room ready and all the target VCs that you want to talk to are top of mind. You need to talk to them all at once to maximize your momentum and convert conversations into hard commitments.
3. Finally, a well-known rule within the venture capital industry is to always get a warm introduction. Venture capital firms get a lot of inbound requests, so getting an introduction from someone they have worked with before and trust has a much higher likelihood of working out than a cold outreach.
What are you really looking for when evaluating early-stage startups? There is not one element that makes a potential investment, but there are many that can break it. Some of those well-known elements include the company's team, product, traction, market opportunity, defensibility, among others, with the "team" element being the most important at early stages. However, I often find that people misinterpret the "team" element, where they believe that someone that has the right industry background or is very good at coming up with ideas automatically ticks the "team" box. To me, identifying the problem and vision should be the easy part, it is your ability to execute on that vision that separates the great from the good. Those that have the resilience and agency to dedicate themselves fully to this vision, and persevere when they need to change course, are the ones that I like to partner with, because no journey is ever a straight line to success.
How should founders approach a "no"? What's the best way to build long-term investor relationships even if they don't get a cheque right away?
You sometimes hear that "you should never take no for an answer". I disagree with that, simply because you can spend your energy more productively on the higher-probability conversions than trying to change any one investor's mind. I would treat a "no" as a "not right now": try to understand why they are passing on the opportunity, and see if you recognize any patterns. If 60% of the investors that tell you "no" give one specific reason for why not, they are probably onto something. You can learn from this, incorporate it, and be even more investable for your next round.
What startup sector or trend are you most excited about right now—and why? Internally at STV, we define the next 5 years by two trends: IPOs and artificial intelligence. There are 5-10 companies in our Fund I portfolio at varying stages of IPO readiness, who look to go public over the next 1-5 years. This will provide liquidity for employees, LPs, and GPs, while increasing the number of success stories that potential entrepreneurs can look up to.
Moreover, we believe that artificial intelligence (AI) will produce the next wave of unicorns and that there are more thematic funds that will focus on this, which is why we have launched a dedicated AI Fund, for which we are grateful to have Google as the first backer. Long-term, we see STV as a platform with different strategies, whether that be at different stages, different industries, or different investment strategies altogether. We empower our people to think outside the box, which resulted in the launch of the non-dilutive (NICE) fund and our AI Fund.
