What investors look for in early-stage companies?

Karina Halstensen Birkelund from Farvatn shared what they look for in early-stage companies with participants in our MIT-based startup programme.

Gut feeling is always part of the equation, said Birkelund.

Although, the team, market potential, pricing, scalability and value proposition are all key factors in Farvatn’s screening process.

Birkelund highlighted Noteless, one of Farvatn’s portfolio companies, as an example of a company with a strong value proposition. The company uses AI to support doctors by listening to patient consultations and helping write medical notes.

Here, the value proposition was so strong that the product almost marketed itself according to Birkelund. Word of mouth did the work.

Øystein Theodor Ødegaard-Olsen is one of this year’s ScaleupNext participants and also one of the co-founders behind Noteless. He stepped in with Birkelund to share with the participants his personal experience with Noteless’ journey.

Today, he is building Eupnea, a health technology company that has developed a wireless sensor attached to the patient’s chest to monitor breathing continuously. Encrypted data is sent to a Norwegian cloud-based platform, where healthcare professionals can track patient status and receive alerts if critical changes occur.

5 Key takeaways

Here are a few takeaways we brought back from the session with Birkelund:

1. Do your homework and tailor your message

Research investors before reaching out. If your case falls outside their mandate, it is a waste of time for both sides. Make it easy for them to see why your company is a fit.

2. Be clear, concise and professional

If a founder cannot explain clearly and briefly what they are building, that is a red flag. The same applies to how the team answers questions about market, technology, finances and risk.

3. Build a strong team

The team is often the most important part of the screening process. Investors also value repeat founders who have learned from both success and failure.

4. Solve a real problem with a scalable and investable concept

A good idea is not enough. The product must solve a real need and have the potential to grow. Investors also assess pricing models and exit potential early on. AI has added a new dimension to this by making it possible to scale companies faster than ever before.

5. Keep enough ownership

Founders and the team need to retain a significant share of the company to stay motivated and maintain real ownership of the concept. Ideally, the founder team and employees should collectively hold more than 50 percent of the shares.

Want to learn more?

We are continuously recruiting participants for both our startup programme and our scaling programme.

If you would like to learn more about how your company can take part in the programmes, supported by Sparebanken Norge through Agenda Vestlandet, please do not hesitate to get in touch with us.