As being a part of the Y Combinator’s Startup School Advisor Track, we were obligated to provide a weekly progress update on tracking a pre-defined metric (Revenue in USD, active users, weeks til launch, other) that is relevant to our development as a company in order to be eligible for winning one of the 100 equity-free grants given by the YC at the end of the course.

Because Berger Neurorobotics’ team is highly motivated and goal achieving, we took on that challenge heartedly and decided to do our best in order to meet the necessary criteria and qualify among the top ones that may win this recognition award.

The goal of this post is to provide an additional material explaining and visualizing how did we do on executing this task as well as to share the learnings that we uncovered along the way.

For the purposes of a better and more cohesive reading experience, we decided to divide this post into a few sections. These are as follows:

– Why are we currently fundraising: a relationship between raising initial startup funds and further product development;

– Our fundraising goal overview: why this is our top priority at the moment, how much do we aim to raise, and why do we need the money for;

– YC SUS weekly progress overview: how did we do in finding our early-stage investor;

– Basic conclusions: what we learned while walking the path of fundraising;

– What comes next in our fundraising journey.

Before beginning reading, we encourage you to not only be critical in commenting this post and sending us questions that you considered are being unanswered in it but also to share this blog publication in order to spread the world and demonstrate the journey a startup goes through while taking the YC SUS program. It’s important for us to connect with other founders and share knowledge on topics that may be relevant so that we can all be better founders, managers, employees, people of tomorrow.

So, here is Berger Neurorobotics’ YC SUS weekly progress log overviewed in more details.

I. Why are we currently fundraising: a relationship between raising initial startup funds and further product development:

We’re currently raising money simply because – although this may sound obvious – our startup is going through a financial hardship at the moment. We’re keeping our monthly burn to as low as possible which allows us to lengthen the runaway that we’ve got left. Sad but true, this is not enough and definitely, this won’t be a long-term solution. That’s why we need to attract investors’ interest and resources (money, connections, reputation, domain expertise, etc.). Also, as being a hardware startup by itself requires additional capital raise in order to organize the initial manufacturing, shipping, and handling processes as well as paying for rapid prototyping initiatives and purchasing assembling components.

Since we’re in the early stage, the total amount of money that we plan to raise will be budgeted for product development initiatives only. No marketing; no sales; no PR. Just product development and customer interaction. These are our core priorities at the moment. Having money in the bank does not only allow founders to be sure that they will pay employees this month’s salaries. It also helps them work on the product, realize its early version on the market, and start getting traction. The topic of the relationship between raising initial startup capital and further product development deserves a separate blog post on its own. However, since this is not the focus on this post, below we’ll simply outline the three most important reasons why that statement is undeniably true.

1. No money, no progress: one of the things we learned while being involved in the YC SUS program was that “If you’re not making progress, then what are you doing?” Progress is the definition of growth, success, happiness, and many more Silicon Valley buzzwords. Humor set aside, this in our opinion is true. What’s even more, that progress also means speed. At the moment, we argue that because we lack sufficient material resources, we’re not running, we’re walking. Literally speaking, we cannot execute on our product development roadmap plan if we lack cash in the bank.

2. Capital=pride: We’re very down-to-Earth founders. We’re humble, quiet, and we don’t have a strong media presence (yet!). However, our ego is tightened up with the success of our company. A successful company is such that can pay its debts on time, assign bonuses to its employees and executives, and pay dividends to its shareholders. We’ll be proud if Berger Neurorobotics turns out to be a successful company in due time. So that we can start this journey appropriately, we need to raise some initial amount of capital.

3. Rapid Product Development is an Indicator of Serious Business Development: the meaning of a startup is to develop and provide such kind of product/service that improves or outdoes what’s already available on the market. Activities related to product development automatically reflect on initiatives that are business development ones. So that a startup can improve on its most important (business) metrics, customers must find a product to be valuable to them. So that they can do so, a startup must invest in core hard-tech competencies to develop the most desirable product features that address the most painful customer points in particular.

II. Our fundraising goal overview: why this is our top priority at the moment, how much do we aim to raise, and why do we need the money for:

We’re currently raising a pre-seed round of $500,000 from both angel and institutional (VC) investors.

We need the above-mentioned amount of money so that we can execute the following strategic activities in a short period of time:

1. Release our beta product: an official and private launch of our product. This includes but is not limited to finishing tasks such as completing our industrial design, organizing the initial manufacturing and production cycle, building up our content platform, finishing up our software platform, developing further R&D strategy for upgrading our device, etc.

2. Start building our private community: handing out the first batch of headsets to our early customers and start iterating based on the feedback they provide, developing “Berger Neurorobotics Troopers”, starting word-of-mouth initiatives, etc.

3. Seed Round preparation: attracting other VCs’ interest in order to join us and assist us to realize our long-term strategy and vision.

III. YC SUS weekly progress overview: how did we do in finding our early-stage investor to give us money (and not only), what tools did we create to help us ease the process:

During the course, we contacted 45 investors in total, which makes 5 per week being approached on average. The number should have been 50 but in our first week, we tracked another metric which we subsequently changed based on the advice of our group moderator.

We set the metric to 5 because that would make us both introduce ourselves to a relatively large number of targetted investors and at the same time manage to establish a strategic connection with them in order to stay in touch in case they don’t want to invest in us at the moment.

We managed to create a few tools that are aimed to help us collect and visualize all the information that we received during this work task.

1) Investor persona: we did an exercise with the entire team and came up with a one-sentence description for the investors that we wanted to connect with:

– Angel: a well-connected entrepreneurial professional with stable financial abilities, network, and expertise to initially fund the activities of a hardware startup ($50 – $200K);

VC fund: an early-stage, pre-revenue fund that is particularly interested in exploring new technological frontiers by investing in future-tech startups ($200 – $500K);

– Accelerator: an early-stage startup program providing services for initial launch and growth to startups that have a high potential for delivering an innovation to the market.

2) The Startup School Weekly Logs document that summarizes who we’ve managed to contact and what the feedback and interest from any given investor were. The document can be accessed and overviewed by clicking here.

3) Investor Criteria Filter (Filtering System): = shows how we choose an investor based on a pre-defined needs and goals that we need to achieve first. The filtering system can be found or downloaded by accessing this link. [Who do we contact].

4) Investor funnel: = illustrates the process that we go through when approaching an investor without an introduction from a third party. See it here. [How do we contact].

Our current results that we managed to achieve are placed in the Startup School Weekly Log Document shared above. However, a few notable mentions are worth it to be mentioned here. Among all the investors we manage to contact, 2 deserve notoriously place in our diary. These are:

Vinod Khosla, the founder of Khosla Ventures, the co-founder of Sun Microsystems, and a legendary venture capital. We contacted him directly. Let us know if you want to know what his answer was.

Garry Tan, managing partner at Initialized Capital and also one of our lecturers in the YC SUS program. We contacted him directly via LinkedIn and then forwarded another message via e-mail. Ping us and we’ll send you some additional info about how our communication went on.

IV. Basic conclusions: what we learned while walking the path of fundraising:

Throughout the process, we were all ready to learn from the expertise of the investors. We kept our ears open during the whole time and we learned! Here are some key takeaways that we’d like to be spread out:

1. A strong domain and/or technical expertise MUST be demonstrated by the team in order to ensure the investors that the initial version of the product can be built internally.

2. Humbleness, coachability, and self-awareness must arise while ego, self-centricity, and narcissism must be forgotten when talking with investors. Investors know that startups are risky and even the most promising ones usually fail. That’s why they want to see that the founding team is self-aware.

3. Is the founding team risk assertive? This is something that investors want to know. They want to be informed about how far a founder is ready to go in order to achieve success. Just think about it for a moment: if a founder is not willing to go to the end and give everything in order to succeed, then how can an investor even think about doing exactly so.

4. Who does what and why: entrepreneurs must be very clear about who does what and why and articulate the responsibilities as clearly as possible to investors.

5. If the entrepreneurs can provide early traction for market validation, then probably this will be their biggest and strongest leverage when talking to early-stage investors. No awards, no diplomas, no credentials, no connections, no nothing matters as much as showing real evidence of somebody who’s using your product.

V. What comes next in our fundraising journey. 

Before going to what our fundraising strategy is, we’d like to provide some numbers regarding the final result of our work we got done while taking the course:

– 45 investors (angels, VCs, and a few accelerators) were contacted;

– 7 investors were interested in meeting us personally (either via Skype or in person) and understand more about our product and technology;

– 3 investors are recently in our pipeline and we’ll continue talking with them in order to determine next steps for collaboration and investing in us.

These numbers are in fact real and quite optimistic. We honestly expected that we wouldn’t go that far and we’re glad that we managed to do our best to impress all of the “sharks” we had the chance to communicate with.

What comes next:

– Plan A: raise a pre-seed round of investment from the investors who are interested to collaborate with us.

– Plan B: win a few grants sponsored by the Innovation Fund Denmark and Horizon2020 EU programme.

– Plan A + B: that is the most ambitious and ideal option that we have.

– Plan C: quit (which is not an actual option but – since we’re self-aware – we wanted to nevertheless mention it).

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