Seeding: why they say “no” to a project

by bold-lichterman

Frenchweb offers a series of views from fund managers to shed light on this stage of funding.

Read also: Seeding: how investment funds judge start-ups


FrenchWeb: When you reject a project, how do you explain this choice, is everything based on the initial pitch?

ISAI Management is a Parisian fund dedicated to Internet entrepreneurs. In 2015, it set up a specific seed fund.

Mounia-Rkha-A-credit-Olivier-EzrattyMounia Rkha, Seed Club Manager at ISAI Gestion: I often tell the companies that we refuse to finance that they are too young, which can be confusing since I am doing seed money (they do not fail to point out this to me by the way). What I mean by that, beyond the metrics, which reveal things, even at this point, is that they haven’t yet built the elements I’m talking about. Read: how investment funds judge start-ups). Concerning the metrics expected in priming, it is a question of seeing if, on a small sample, the assumptions are realistic. For example if you have very few users because you have invested only 1000 euros in marketing, but you observe a strong recurrence on the latter, it is a good clue….

Several other reasons are taken into account and do not call into question the quality of the projects and the founders. We have favorite sectors or models and others we are less familiar with. We arbitrate among a large number of projects because we do few deals …

When the entrepreneurs are straightforward and straightforward, the pitch is always good and the exchange interesting. The vast majority of entrepreneurs are pretty exciting people, so I don’t really like to put myself in the position of a judge (maybe it was my experience as a startup that taught me that). There is still a pitch that amuses me a lot: “The specifications are ready and we are raising 2 million euros to develop the site”. It’s so 2001! Completely uncorrected from the reality of today’s startups whose founders know how to code and accomplish wonders with very little capital initially.

Based in San Francisco, Paris and Berlin, Partech