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Private Equity

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Business Angels: what to make of start-ups selling to major accounts?

Many start-ups sell to major accounts, and opinions are divided. Here are three criteria to determine whether it's a good or a bad sign.

/ Sommaire

If you invest in startups that sell to large accounts, there are 3 things you absolutely must check. Here they are.

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Why can it be risky to invest in startups that sell to large accounts?

At first, I thought it was too risky to invest in these types of startups because:

Leads are difficult to convert
Startups spend too much time deploying the first client
It is more cash-intensive
It is less "viral"
...

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The value of investing in startups that sell to large accounts

But in hindsight, I realized there is still a benefit to funding these companies:

Large accounts are more loyal, or less agile when it comes to switching solutions
You can cross-sell by deploying your solution across different entities or countries
Average order values are higher and you can easily up-sell
You gain prospect trust by showcasing your large account clients
You can negotiate a down payment during your POC phase

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The 3 things to look at when you want to invest in a startup that sells to a large account

So, if you decide to invest in startups that target large accounts, I recommend checking these 3 points first:

The startup is sufficiently funded to last until the first clients pay
There is a plan B in case the POC is not validated
Review the client contract deployment plan in detail (geographic coverage, rollout pace across subsidiaries, pricing rules, and termination clauses...)

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Now that you know everything, it's your turn. And if you still have questions after all that, contact us ! We have a large community of business angels that we support with deals!

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