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We want to share here our experience, methodology and tools that helped us raise better and quicker than we thought.
On April 10th, we announced a 23 million€ ($28 million) Series A funding led by Index Ventures. This funding represents the largest one in the French Insurtech space so far and one of the largest Series A in France.
It took us 10 days to close the whole process (term-sheet signature). To tell the truth, we were surprised of how quick it happened. We had planned to dedicate 3 full weeks to get to the term-sheet selection.
The goal of this post is to explain why we feel this is not a miracle and to share good practices we have learnt.
Here is our methodology. Please share your thoughts and feedback in comments!
Fundraising is not a goal on its own. It is a mean to get your company to the next stage. That is why your main focus should always be to build the greatest product and the best team in your field. We believe great culture brings great value (you can find out more about our culture here and here).
Nurture smart and close relationships with VC. Update every 4 to 6 months your preferred investors on your market and that are the most relevant at your stage (ticket size, geography, type of companies they invest in…). It is going to be a list of 10-ish VCs.
In doing so, you will skip background meetings when launching your roadshow.
Fundraising is a complex process. You’d better launch it before dying for cash. It sounds obvious but worth saying. You are far better positioned to raise when you are planning for expansion & growth, than when you are saving your company.
The first step is to select your favourite potential investors. Choose the one that are more likely to invest in your company. Don’t waste time when they don’t invest often in your geography, business or at other ticket sizes (even if they say they do exceptions). 12 is a maximum in my opinion if you want to keep your energy at the right place.
Learn to say no, if you receive a lot of inbound. Set your own schedule. Choose quality not quantity. To be efficient, stay focus on the investors you have chosen. A note to that: some investors are low profile but have very high impact. Even if you don’t know their name at first glance, they are worth investigating.
Be ready. Take one week to build your deck, your data room and a Q&A with the answers to the most obvious questions. You will make the overall process more scalable for you, not answering 20 times the same question. It will also make your VC life easier having access to all the data to run their first due diligence.
Questions of the Q&A:
How does health insurance work in France?
What is total market for health insurance?
What is the total addressable market today (freelancers and SMBs)?
How does “Prévoyance” work in France?
Balance sheet and regulation
How much equity or equivalents do we need to reach €500m of premiums in France?
Use of funds in a €20m+ round?
What are the regulatory constraints towards fundraising?
Breakdown analysis of clients by type
Analysis of acquisition channels
What are the next steps on growth? How will be set up a Sales organisation?
What are some of the key features and differentiators of our tech stack?
What is the history of our loss ratio?
What are our main risks?
What is our reinsurance strategy?
Product, value proposition and roadmap
What is our unique value proposition and why it is differentiated?
Should incumbents improve their UX / UI (eg. rely on start-ups for better claim automation process)? How would Alan’s moat and positioning be affected?
Product roadmap on the next 3 and 12 months
How our data mastery will help us win middle-term?
What are the key milestones we would like to reach in France before expanding geographically?
What criteria for new countries?
Regulatory constraints to open new countries
Finance: business plan, cap table, cash position
HR: company values, option plan, salary & equity grid, culture, HR & hiring at Alan
Orga: last board meetings, sample weekly updates, roadmaps
Before you start your process, train your key execs and help them to be the best. Raising money and interacting with investors is not a simple or a straightforward job if you have never done it. Take 30 to 40 minutes to explain the process, that they are going to be interviewed,how and when.
Select a lawyer that you trust and that has done several similar rounds. It is better to pay marginally more to get the best ones if your deal is really important. Spend time to run a due diligence on your lawyer. In order to do so, ask what companies they have advised and discuss with the founders. Once selected, have them prepared: share data, legal documentation, — your vision and objectives of the fundraising.
Finally, have your board & current investors ready. Decide together the right time to launch the process, and the minimum conditions to close a deal. Then, keep them posted during the preparation. At last, greenlight the decision on the termsheet with the board. Transparency and trust are key if you want to move quickly.
Keep the process under control. Set your own timeline, define your milestones and share it. You will have the lead and impose your own tempo.
For us, key milestones were:
Have the list of VCs to be contacted
Prepare the email to contact them
Begin the discussions, with some documentation (deck). Tell the VC there is a Q&A and Dataroom available and share the timeline you have set
Plan an empty full-week empty just to meet your potential VCs
Be ready to have partners meeting the next Monday (partners meetings tend to be on Mondays)
And here is how our final timeline looked like:
Thursday: send emails
Monday to Friday: meetings with VCs, have an empty schedule
Next Monday: partners meeting
Discuss the TS with the board and negotiate
Ref calls about the VC
Friday: signature of the TS
Always be transparent, share information to everyone at the same time. Transparency brings serenity and trust and creates good condition for smart and quick decisions.
Make yourself available. Clear your agenda but protect your team, not too affect to much the business. As CEO, raising fund will be your full-time job.
Be fair and never lie. It is a golden rule. Don’t tell the name of other VCs or try to manipulate information.
Be transparent. If you receive a term-sheet at a certain valuation or with certain terms or if you have minimum objectives, share it in an open manner just not to waste the time of your potential investors. You might have them on the next round and you want to preserve good relationships.
I hope that following this path and steps, will help you achieve your goal. And if you want to share feedback or ideas, please feel free to do it publically so that everyone can benefit from your thoughts :)
Want to join our crew, please drop a line to [email protected]