The great Indian startup bubble finally exploded last year – and so loudly! Funding for startups dropped from $2.9 billion in Q3 2015 to $583 million in Q2 2016. That’s a drop of over 80%! VCs and Angel investors aren’t as hyper-optimistic today as they were a few years ago, perhaps due to Indian startup icons falling downhill by the dozen. TinyOwl’s drama and disappearance, PepperTap and LocalBanya’s deaths, and several other failure stories have made investors adopt a more realistic view of the kind of business models that really work in India.
So it’s become all the more important now for new startup founders to pitch themselves better when looking for potential investors. If you’re one of these, here are some pointers you should mention to keep that pitch going strong:
This is the most crucial point investors look at – if you’re not unique, it’s unlikely you’ll survive. Let’s say you’re planning to start a café. There are already a dozen in your area. To beat them down into the dust, your café needs to offer more value to its customers. Is it more pocket-friendly? Do you sell a novel coffee blend that’s not available anywhere else? Whatever it may be, add it to your pitch.
At some point, your startup has to reap profits. You must give the investors a rough idea of how and when this will happen. Ultimately, people are investing their money in your business because they want more money in return – make your financial capabilities clear in the beginning!
How big could your business eventually become? Can you cover your local area, your country or the world? How and when will you begin to scale? Many businesses fail because they scale up too early. Investors will want to know exactly when you plan to start your expansion.
Even the most interested investors will want a way out of your business at some point. It doesn’t matter how spectacular your idea is – no investor would want to be invested until the end of time with your firm. Show them a path of exit and lay it out, your plans may change or your startup may pivot but the exit roadmap should be defined as clearly as possible.
Be very clear on exactly who your target audience is – and how you plan to reach out to them. Specifically, mention their age group, location, work profile and gender. You’d need at least a rough marketing plan to begin with. Will you advertise on social media? Or will you stick to traditional newspaper ads? It’s wise to do some market research beforehand, decide on the most appropriate channels of communication that you’ll use to reach your target audience.
How diverse is your current team? What are their educational qualifications, and how efficiently do they work? How many new people will you need in the next few months? Investors will look for a strong, dynamic, highly skilled team. If you’re a gang of amateurs with little experience, they might not want to fund you.
It’s advisable to have each team member specialize in one field. As your startup grows larger, these members would have teams of their own and turn into leaders. If you’re doing the pitch with all team members present, make sure they all get a chance to speak.
Every business, old or new, faces risks on a daily basis. These might be legal risks, technological risks (something new comes up and renders you obsolete) or any other risk. You must have contingency plans in case these risks realise themselves. For example, Kodak’s camera film faced the risk of being wiped out by digital cameras. They didn’t develop a contingency plan, so when digital cameras got better, Kodak was crippled and struggled for several years. They filed for bankruptcy in 2012.
Although these pointers are what you must remember during your pitch, make sure you don’t forget the basics! Dress well – looks matter. Take your whole team with you, keep the pitch short and sweet (under ten minutes if possible) and stand straight, optimistic and confident! Hope you’re all excited to meet an investor now!
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