While your startup idea may have strong business potential, if the pitch goes haywire, you could miss out on an opportunity to get the financial support and backing of established investors.
We got Sanjay Swamy, a founding member of venture capital firm, Prime Venture Partners to share some pitching tips to help startups have a better chance at getting funded.
- How important is it for a founder to know his investor?
Knowing your investor is as critical as knowing your customer. You have to verify if the investor you’re pitching to is interested in the sector you’re targeting, and the problem you’re solving. So it is essential to do your homework well in advance.
Nowadays with easy access to social media, getting this information is easy, follow the investors you’re planning to pitch to, research the startups they’ve invested in, the sectors they’re watching and the money they have. You’ll be able to find a pattern and gauge beforehand if there’s a likelihood of success.
“There’s no point selling diapers to people without children.”
Another point is, try and get an introduction to the investor rather than sending cold emails, this way they will be obliged to respond to you.
- What are the 3 tenets to the ideal pitch?
As a seed stage investor, I can tell you the parameters we look at. The first parameter is what is the problem that you’re solving, who is the customer that you’re solving this problem for and whether you have a unique approach to solving that problem.
The second parameter is the size of the problem that you’re solving; you should be able to prove to the venture capitalist that there is a massive problem that makes it attractive for them to invest in.
The third parameter is timing, why is now the right time to be solving this problem. Another parameter is the background of the founding team and the passion towards the problem that they’re solving.
By the end of the meeting, the investors should be so excited and convinced about the idea that they should be sending emails to the rest of their partners.
- What should the ideal mindset of a founder be when they get 2 minutes with an investor?
When a founder goes for a pitch, their sole objective at all times should be to get the next meeting, apart from winning the deal. Give enough information to catch the interest of the investor, get their card and move out.
Secondly, use the opportunity to ask questions and listen to their feedback. There’s a consensus in the industry that VCs are arrogant guys, and that’s the nature of the relationship. However, if you cover the 3 points mentioned above, make the conversation a 2-way discussion, then the process will be much easier.
Also, once an investor has shown interest, follow up immediately to remain on top of mind.
Another tip to entrepreneurs is to keep your pitches precise and as crisp as possible. Ideally, 6 slides + 1 introductory slide should be enough.
- While bootstrapping, is any money good money? How do you pick your investor?
You should have a good idea of the investors you want to connect with. It’s not just about the money, but the added benefits, network, and ability to work together that make an investment successful. So treat your VC like a customer and start the conversation in advance, as it’s a two-way street.
- What is the relationship between a founder and investor like?
Ideally, the relationship between founders and investors should be completely transparent, with the ability to have open discussions. The end goal of both parties should be to improve the business.
It’s better if VCs are thinking of ways to improve the business in the middle of the night. However, we’ve had some meetings where founders are reluctant to share details and not willing to ask for help. This can prove to be detrimental to the cause.
The only time there’s a complete fall through of a partnership is if there’s a question of integrity.
- Any memorable startup pitches that you recall?
I remember that the Credex and MyGate pitches were bang on. There are some startups that you just know will do well, and these were two of them.
Another interesting startup pitch I remember is Happay. They had pitched to my other 2 partners who found their idea interesting. As I was travelling, my partners asked me to talk to them via Skype, however, due to my hectic schedule and jet lag, I ended up falling asleep on the call.
Mid-call I work up and asked them to come in for another meeting when I return to India. When I met them, I was moved by their passion, depth of knowledge and interest in the problem they’re solving. Without a doubt, these guys had the qualities to achieve success.
- Which sectors are you looking at investing in currently?
We’ve invested in a number of fin-tech companies recently. The next focus is on logistics, healthcare, SaaS and other spaces that focus on the digitisation of India.
- What is the one piece of advice that you would like to give entrepreneurs out there?
Exhibit sincerity and willingness to listen but don’t take direction from anyone. Listen to the advice you get, internalise it and come up with a strategy of what you’re going to do.
At the end of the day, only you understand your customers and business, not anyone else. There will be several learning loops and iteration loops. Focus on building a solid business as this is the best opportunity and the right time to be doing it.
Contributed by: Ashika Devi
Volunteer, Headstart Bangalore