The process of fundraising and achieving the seed investment
8 August 2018 - belgrade

On August 2nd, we were pleased to host Janko Stojanović, founder and CEO of Buildcon, at our regular Startup Growth Meetup. Janko shared with us his experience about starting a business, seed investments, negotiations and he also gave a number of tips on how you can improve the development of your startup and set clear expectations. In this text, we addressing key messages from the event itself.

Even as a student of the Faculty of Civil Engineering in Belgrade I studied department of management, technology and informatics in construction, which is one of the newest departments and it deals with the management of construction projects. There I was already interested in databases used in construction and some operational research. Alongside, as a student, practically making a very primitive, in Microsoft Access, SQL database for some smaller construction companies in Belgrade, mostly through the contacts of my parents, who are both construction engineers.

Then, I started to notice that most of the directors of construction companies in Belgrade were saying more or less the same thing: “I come to work and get an extract from the bank. When I compare it with yesterday’s extract, I see one digit from yesterday, and the other today and I see that difference now, from 50,000 euros and I have no idea where the money went. I mean, there is something going on, we have three projects, but I don’t know where the money disappeared. And that’s what happened every day.” That’s how my idea was developed.

As well as everyone who are just starting, at that moment I didn’t have money, I didn’t even know how to program, I wasn’t even a designer – I had nothing. I had only an idea and as it says, domain expertise

Then I set up a team of friends as if it was a joke – one is a designer, one a programmer. We have started to work on the concept of what would eventually be the MVP of our product, which we entered the market for the first time. To do this, we had to hire programmers and we immediately – when it was day 0 – realized that we needed money to do it.

Practically, this were the steps in the process of fundraising Buildcon:


  1. Step – Friend aka Angel Investor: As I said, since day 0, we realized that we needed more money. And then, learning and reading what people do in our position, I tried to look for an investor, somebody from my surrounding who wanted to invest a smaller amount of money into what we plan to do. Then there was one friend who was for it. At first, it was a really ridiculously low amount of money, and I can tell you that now, it was 10,000 euros, which is really funny in terms of any investment. From those 10 000 euros we came to the first MVP of our product, which we released “live”. From the 10 000 euros we had remaining money, which we used to promote our product online, to target some companies and the response was pretty good. In the next 3-4 months, we had a growth of 10-12% more trial users, in the first 3 months over 200 companies signed up. This was 2015.

And the MVP we made, as well as 99% of the MVPs in the IT sector, was a barely unusable product. We were a bit embarrassed – you don’t have this, so you don’t have that, so you should do this.

So in that period of the first MVP, we learned how to develop our product, what functionalities should it have and what it needs to do. Of course, we figured out the process and how to communicate with clients, which types of clients are good for us, and who aren’t, whom to skip, etc.

  1. Step – Beginning of fundraising: When we realized that we needed a new version of the product and that we should begin to work on it, that meant more money. At that moment, I went into the fundraising process for the first time. After that, I only did it two more times. The first time, the fundraising process looked like this: first I read a lot about it, of course online. In my surroundings, I had a friend Vuk Nikolić, who led, and still is, running companies, so I received one-on-one advice from him, but also I really spent days and nights reading about it. Everything I learned, before I went to the accelerator program, was on the Internet.

I realized that I need a good pitch for investors.

I needed a good presentation, a basic business plan, a lean canvas – which is the A4 paper on which some of the most important parameters are written, I assume that some of you know what it is, and I also needed some things such as a sketch of a business plan, and what is it that we know how to do. The first occasion when I encountered it there were some numbers like the size of the software construction market in the world, and then it narrows down, for example, how much of it is online software, how much it is used for project management, etc. It takes a lot of statistics and it works for both the consumers and for B2B products. Market analysis is equally important, it’s just a little different.

By joining these decks, I started off from Angellist and F6s sites, which at that moment, and I think now, are two portals with the most, how to say… These portals connect investors and investments, startups with investment funds, etc. And I started making profiles for Buildcon on those portals, to carefully fill them in and through these portals, I started applying for different funds and for various accelerator programs.

Then we started there in the region to talk with funds from Bulgaria Level and LaunchedUp. I know LaunchedUp is still working, but I’m not so sure about Level. LaunchedUp rejected us for investments because we weren’t developed enough at that moment. Their sweet spot is when the company is already at the level making between 50 and 70 thousand euros a month, which we at that moment certainly weren’t.

  1. Step – Belgrade Venture Forum – This was all happening in 2015 and then the Belgrade Venture Forum took place in November of 2015. It’s the typical startup conference to which investors came. Then startups do their pitching at the conference and later get to talk to the investors. We were invited that year, and by chance, Ed Spiegel, an investor from San Francisco, was also there too. I did a presentation of my current version of the product.

I don’t know if any of you have done it, but when pitching or fundraising, you are changing that presentation from week to week. You always change something and in the end, you’re left with thousands and thousands of different versions.

I remember that the one I chose to present was one of the better ones. And that was it, as I went into the hall to drink something and refresh, there’s a mail from Ed: “Let’s meet tonight. I’m a civil engineer and I’ve been struck by what you talked about. I am interested to speak with you.” What I did at the beginning was a coincidence, and after that, I learned how to do it; it’s key that you shouldn’t talk to every investor, angel investor and fund, but you should talk to people who you know for certain that they have something to do with what you do. You’re searching for investors that have invested in similar companies to yours, or you are searching for angel investors who are in the same industry as you.

My entire negotiation lasted no more than a week. We were invited to their acceleration program because they are a fund that has its accelerator program in San Francisco lasting five months. This means that they invest in the company and the company has its own accelerator program which was supposed to start in January 2016. This is all happening in November 2015. Prior to the Venture Forum, we applied at Angellist for various funds and for the Seed Camp, which at the time was one of the best early-stage startup funds in Europe. They’re from London. I also had two rounds of conversation with them, passed the initial, second and third round. And two days after I made an agreement with Ed, I got an email from them saying they want to invest in our company. And then I had to connect them into one investment round, which was a good thing because they already knew each other and worked together, investing in the same companies earlier. So it happened that we had both of these funds in the first round, which may have been a little overkill at that moment, but it turned out to be a great thing. Not so much because of the money, but because of future fundraising, because from that moment it really was a lot easier for me, because if I sent a mail to a fund and stated that we had already gone through the 500Startups and SitCamp programs, all the doors would open to me. They always wanted to hear what I had to say.

  1. Step – Accelerator Program – After that, of course,  I went to San Francisco. I was there for six months. This acceleration program really changed my business life because I learned there more than I learned in my entire education so far, because I learned from fantastic mentors who knew exactly what I needed: how to sell my product, how to make growth, how to set up PI-s in the first 6 months, in the first 12 months, how to optimize the sales panel, etc. They really worked with me on everything, and that was an invaluable experience. And I can freely say that this accelerator program is much more valuable than the investment they invested.

Through them, we contacted and spoke with the largest funds.

It all happened at an early stage, some 6 months after the Belgrade Venture Forum, and we then still had that MVP, which we have in the meantime pumped up a bit. We didn’t have numbers and we didn’t have a presence in America which is more or less compulsory for these funds.

The goal of this accelerator program and most of the companies is that they are charging so many numbers by the end of the program, in order to as a top point fundraise an investment in size from one million to five to 10 million dollars.

What I realized at the end of the program is that we don’t have those numbers because we are not in America and that there is little that I, as a founder or non-US citizen, can do. I’m not saying that this is now the main obstacle, but it is one of the factors. It was a bit harder to do that at that moment. Now, if we had phenomenal numbers, there would be no problem even if we were from Mars.

  1. Step – Finding the right investor – In June 2016 I returned to Belgrade and decide to fundraise with the European fund. And here I made an epic Excel Sheet with over 700 European investment funds. Then I did a qualification of what funds would be interested in investing in our company, so there was no wasting time. And then I started to contact those funds. Simply, this fundraising process took too long in comparison with Silicon Valley’s standards, because you should set yourself a strict deadline, to then tell investors so that they know they can lose the company if they don’t get involved in time.

It’s now a two-edged sword, because then if you pass the deadline, you know that you haven’t done something right and that you haven’t achieved your goal. And because of this, they give themselves these terms, say, for 3-4 months and they really respect this deadline. Now, this is usually done by the CEO, but it’s a little challenging for a startup that is at an early stage because the CEO has a thousand other different jobs, and fundraising requires focus and scheduling several calls a day, especially if you are in Europe and are talking to people in America, because these are then called at 9-10 in the evening, so it’s a very painstaking job.

And that’s it, we came to some point in which we are now. There were many adventures and climaxes, even depressing moments. It happens that at some moments you are unrealistically happy, and in others unrealistically depressed. It’s very important to me not to give up and I am greatly happy that I never did. On the other hand, we also need to know when to give up. It is now an interesting seesaw, because you should not be too persistent, because if something does not go and does not work, you just have to turn to something else and not waste more time on it, and on the other hand you do not have to give up on something that is depressing it could be good.

Buildcon is a company that was created three years ago and is engaged in the development of software for managing construction projects. Their main product is a web and mobile application used by field engineers to link performance monitoring, costs, and everything to a system that is virtually a link between the terrain and its investors, directors, etc.

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