Every business when brought to light, reveals behind it a painstaking process, marathon hours, detailed research, discipline and a vision to revolutionize the industry. When you communicate your idea to others, they see your venture through your eyes. Despite all that, not getting investments can be painful, funding being crucial to get a foothold in the market. But like any art, there is a certain rhythm and structure that leads to a successful story.
The Indian Start-up Ecosystem has really taken off with 38,455 DPIIT recognised Startups. But some studies show that about 90% plus investments fail. This means that with the growing number of startups, more & more funding is needed, which in turn causes Investors being glutted with pitch decks. Therefore, Investors you pitch need to be shown that you are an opportunity and source of deal flow for them. This is about how you stand out and lie in that salutary investment category.
Here are a few details to take into account while approaching investors to get that ideal fundraise to propel some of your key operations:
- Research your Investor: There are various websites and even an Investors own profile on social media that gives details of who they are, how they invest and more that you must be thorough with. Incomplete research on them could indicate ignorance on your part or just simply shows that you haven’t done your homework well.
- Timing to connect: There isn’t really a right timing to pitch for investments, it is more of when you know that you’ll be able to generate interest in your products or services and have done your ground work. Also, it depends on what kind of potential investor you are targeting – some want to be involved right at the development stage while other prefer to look at it when already taken to market and selling.
- Have a Backable Story: There is no good in talking imaginary unachievable plots, what’s rather better is to under commit and over perform. If your story sounds too good to be true, it most definitely is many a times.
- Choose not only for Money: Investments shouldn’t be your starting point. Investors prefer to pay for growth. It is not just about the monetary returns that you fetch on those funds but also them wanting to be a part of a value generating business. Articulate how they can strategically help you with their network in addition to just the money.
- Compelling USP & FOMO: Investors want deal flow as badly as you want investments. Generate a veritable feeling of FOMO. Make them see you as an opportunity and that they’d want to be a part of the journey that you tread on, be it introducing something brand-new or disrupting the existing system.
- Traction: Show Initial Build-ups – you can expect favourable responses when you have certain market tractions. They see that initial set of customers/users as an evidence. You help them reduce their risk and they’ll back you for yours.
- Robust Future Projections: It is really both ways, what you bring to the table and how you present it. Show projections or you are done, they most particularly don’t want to waste their time. Enlighten them on what you plan to achieve and how. Returns need to be indicated beforehand.
- Research your Market: Investors see validation in your business through your research and insights. It could be competition analysis, industry size, current economic trends etc. All this gives them an idea to asses viability of their investments in your venture.
- Research your TAM, SAM, SOM: Know that the entire market is not your Target Audience, there is a difference between Total addressable market, Serviceable available market and the Serviceable obtainable market. Provide your potential investors with gen to enable them to see how big your industry is, what you think is a viable target (both business accomplishments and end users) and how much you think you can capture. Basically, what investors want to be shown is – how you’ve tackled your local market getting primary response and once that is done, your aim to expand further.
- Killer Pitch Deck: Developing an incisive and compelling pitch deckis crucial to a growing Start-up. It should be apropos to your funding needs; You must avoid ambiguity and uncertainty in terms of, what stage your business is, what round of fundraising will the investment be, Say, pre-seed, seed or angel investing, series A or series B & above. Then, what is the end utilisation of the required funds. Utilise the small window wisely, creating an impressive and convincing narrative.