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Jean-François Arnaud
Jean-François ArnaudCEO of Blacksmith

Feedback on our early stage startups investments

If today the web agency represents almost 100% of our activity, that was not the case when Blacksmith was created.

We had been investing in IT for equity for more than a year and we wanted Blacksmith to bridge the gap between startup project leaders and Seed investment, by becoming one of the first French startup studios. .

Once a startup was identified as "with high potential", we supported it by playing the role of co-founder and helping it on the design and tech part, but also by participating in the branding of startups, in the go- to-market, marketing (photo shoots, launch of advertising campaigns in the Paris metro, social ads...), fundraising, the overall strategy of the startup...

Then, over time, we refocused on a role of project accelerator with a lower stake in the capital against a discount on our web agency prices and various bonuses (connecting investors, AWS credits , etc.) before pivoting to a web agency model.

If the selection of our investments was made by financial profiles, then reviewed by our own investors (BAs, funds, etc.), we were able over time to draw some points of vigilance vis-à-vis our investments:

  • 1) Team: in seed or pre-seed, we invest in a team more than in a concept.

    Execution being the key to success, an incredible concept carried by a bad team will be less likely to work than an average concept carried by a great team, which will be able to bounce back and evolve its business model.

    On the investments made, the projects carried by 2-3 people have generally been more successful than those carried by a solofounder.

    As a team we move faster, everyone brings their skills and ideas, we can take turns in the hard knocks in health concerns...

    Ideally, if the team has already set up projects together or if the founders already know each other well, they will be able to face the difficulties of the life of entrepreneurs together.

  • 2) Done > Perfect: Many entrepreneurs we've met are more obsessed with bringing the product they've had in mind for months (or years) to market than with quickly releasing a first version and evolve based on user feedback.

    In a company where time is a limited resource, it is better to release an MVP (Minimum Viable Product) and evolve it by iteration rather than spending months creating the supposedly perfect product that will potentially be used at 5% by the end users. "Done" is better than "perfect".

  • 3) Be at least 3/4 time on the project: this is one of the rules that we have set ourselves after several years of investment.

    "Yes but if I manage to raise 1 million I spend fulltime on it"

    Why investors should believe in a project where the founder(s) believe(s) so little or are so uninterested in the project that they do not dedicate(s) the majority of their(s) their) time on this project?

  • 4) Entrepreneur VS startuper: several projects presented have more business models of VSEs than of startups.

    The goal of startup investors is to be able to invest in startups to achieve a multiplier on the amount invested.

    Startups, aka companies looking for a scalable and repeatable business model and which tends to have strong growth... not a VSE which aims to achieve profitability for one year and then stagnate.

Of course, these points of vigilance remain specific to Blacksmith and each investor is free to make his choices :)

Feedback on our early stage startups investments

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