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We are a startup in Europe. (A Saas music web app + mobile app and we are now exiting from stealth mode.)

I wonder how to reach US Venture Capitalists and Angels from Europe. We are incorporating soon, will it be negative for our funding prospects to start the company in Italy?

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The conventional wisdom is that it's impossible to get early stage Angel or Venture Capitalist investment from abroad.

The reasons typically given are:

  • Legal overhead. Making an investment will generally involve several complex contracts. The VCs know the laws of their preferred jurisdiction, and have sample contracts to work from. Investing in a foreign company would require remaking all this from scratch, which could easily cost tens of thousands in fees for the lawyers.
  • Managing the company. Good VCs take a board position in their portfolio company, and occasionally help the company with many management issues -- requiting talent, business development, etc. If the VC is more than one or two hours drive away from the company HQ, then this becomes impractical.

Now, maybe you shouldn't let that scare you off. If you're looking for very early stage investment at low valuations, then initiatives like AngelList and convertible debt bridge loans may make that feasible.

will it be negative for our funding prospects to start the company in Italy?

It will mean that it will be far easier to obtain funding from Italian VCs, Angels and EU/Government programs than from foreign sources. Whether this is good or bad depends on the investor environment in Italy. In general, London is the largest VC market in Europe, but if you have a good customer base & support network in Italy, then that counts for a lot too.

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Make a list of Angel investors you would like to work with. Then follow their blogs, twitter accounts, angelist accounts etc.

Try to make a connection with them. Once you do that, sit on the plain and go to pitch them. Good luck!

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