How tech startups can present their best selves to investors
Businesses need funding and, in the beginning, that means impressing investors. Here are some tips on how to do that
Building a business is hard. For every great idea that gets funding from investors, there are many, many others that don’t. Many that fail to get funding don’t miss out because their ideas aren’t worthy, but because they just don’t present their best selves to potential investors.
Investors aren’t mind-readers – they don’t know what you don’t tell them. Nor are they likely to want to support a business that doesn’t seem capable of presenting its ideas well or doesn’t know some basic facts.
It's important, then, for tech startups to present their best selves to investors. Here's some advice from the other side of the table on just how to do that.
Be specific and be accurate
There is little point meeting with a potential investor if you aren’t able to address the key points they want to know about, and you will need to be very specific and very accurate with what you present. Don’t think you can pull the wool over their eyes or blind them with fancy footwork. They’ve seen it all before.
Among the things you need to be specific about are the market you are in and your potential to grow. Iskender Dirik, managing director at Samsung NEXT (Samsung’s corporate VC) gave a number of very specific questions he expects to have answered: “What problem does your solution solve? And how big is that problem in reality? How big can your startup become? Does it have unicorn potential? Does it address a market that is already huge or has the potential to be huge in the future? Does it have the potential to generate significant revenues?”
Oliver Holle, co-founder and managing partner at Speedinvest, a pan-European VC for early stage startups, says founders should “explain in simple terms why the world needs you. What is the problem that you solve and why is your solution much, much better than what is available today? Plus, have a clear plan for the next twelve to eighteen months. Lay out what you will achieve by then, in terms of traction, product and team.
“And, please, don’t argue that you don’t have any competitors.”
You and your people are you greatest asset
It doesn’t matter how great your ideas are or how much you think you can scale them at speed, without a great personal approach and the right people in your team it’s all pie in the sky. So your potential investors need to know that you’ve got the right smarts.
Alexia Arts, investment manager at MMC Ventures says: “This is critical at the pre-seed and seed stage so do not undersell yourself. It's worth going beyond listing your experiences and explaining why you and your team are best placed to build this particular startup.”
As for your own skills as the owner and founder, Oliver Holle gave us a vibrant pen-portrait of a great founder., saying: “Great founders exhibit a talent to combine seemingly opposite character traits into one cohesive appearance. They are bullish and very clear about their long term vision, exuding inner confidence that they will inevitably succeed. At the same time, they are highly pragmatic about their tactical path, eager to listen and learn and adapt, showing humility about all the things they don’t know and cannot know.”
Practice makes perfect – but be yourself
While all this might sound like a tech startup has to be pretty formulaic in its approach, getting investment isn’t about behaving like a clone. Alexia Arts explains: “I wouldn't follow a ‘one size fits all template’. This results in founders fitting their story to a mould, rather than thinking about their own narrative and the key points you want to get across.”
It is also important to practice, and Arts says you can practice with practically anyone you know. Doing this, she says, “will ensure that you are getting your points across clearly, help to refine your message and improve your confidence when pitching”.
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“As a CEO you will need to pitch your company time and time again over the next 5-10 years so you might as well start practicing,” she adds.
Practicing might also help you get prepared for negative responses. Iskender Dirik says: “Because the default answer of an investor will most often be ‘no’, founders need to create a sense of ‘FOMO’ – fear of missing out. They have to convince the investor that saying ‘no’ will mean losing out on a huge opportunity to invest in ‘the next big thing.’” People you try your pitch out on will be able to give you some experience of handling negative reactions, which will help you in the real pitch.
It’s unlikely to be easy to get funding for your tech startup, and there is no magic formula that will put you ahead of all the rest. But there are some basics that it’s vital to get right, and presenting your best self to potential investors can really help your cause
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