So you have a billion-dollar idea, have an amazing team behind the product and have successfully convinced a potential investor to give you 15 minutes of their time.
How do you now turn that first chat into a serious investment opportunity? Here are 5 tips based on our team’s experience working with young startups!
1) Do your due diligence – on the VC!
When scouting for investors, the very first thing to do is to identify VCs who have invested in companies similar to yours both in industry and size as well as teams with existing warm connections with your network. If the VC reached out to your team, consider doing your research on the type of opportunities they are looking for through the team’s newsletters and social media broadcasts.
No matter how you secured the meeting with the investor, it would be good to check in on the following prior to your meeting so as to maximise your time with them:
- Does the VC have any industry/sector preferences?
- What fundraising round does the VC typically invest in? Do they tend to lead or follow up on a round?
- What is the typical cheque size of the fund?
- Any notable successes (and failures!) in their portfolio?
- What is the VC notable for (eg: strong brand recognition, large network, support system of mentors)?
2) Polishing your pitch deck
The best way to secure an investor’s attention is through the creation of an eye-catching, informative, yet concise pitch deck. How many slides is too many? A good rule of thumb to follow would be to have no more than 10 – 15 slides in your deck.
Your pitch deck should ideally include the following:
- Value Proposition/Elevator Pitch
- Market Size
- Business model
- Founding Team
- Fundraising request
In addition to your pitch deck, do have supplementary documents such as your income statement, balance sheet, projected financial forecasts and your cap table on hand, in case the investor takes a shine to your pitch and wants to discuss financing prospects within the first meeting.
Do send a copy of your pitch deck to the VC prior to the meeting along with any key questions you may have for them. Once in the meeting, do check in with the investor first if they have any questions on your deck or if they would prefer you to pitch on the spot.
3) Set out an objective for the meeting
Since time is limited, do set out key objectives for the meeting ahead of the call. For example, if you are looking to get advice on entering a new market the VC is based in, do send the VC some information on your timeline and market entry strategy.
Or if you are keen for a more serious, follow-on discussion on the investor’s participation in an upcoming fundraising round, clearly articulate in your pre-meeting communication the cheque size your team is seeking, when you anticipate the fundraising round will take place and if you already have any investors who have committed to the round.
4) Prepare for a discussion, not a one-way pitch
While a first meeting is typically more casual, do prepare to have a conversation about your startup with the investor rather than having a one-way presentation.
One way to do this would be to engage the VC by asking them questions during the pitch presentation and to also ensure that there is sufficient time set aside for questions and answers, including your own question for the VC.
Investors may also try to get an understanding of your knowledge of the market needs and demands so do ensure that you understand your problem, solution and market fit on an intimate level so as to reduce any potential hiccups.
To get you kick-started, here are some of the 500 TukTuks team’s favourite questions:
- Why you and why now?
- What is your USP?
- What is your traction like?
- How do you test product/market fit?
- How do you develop your products?
5) Follow up with the investor
The investor would typically indicate their interest and provide feedback during your call with them regarding the suitability of your startup for their portfolio.
Even if the VC is not interested in your startup at that stage, it is a good practice to reach out to the investor after your meeting and to thank them for their time and feedback!
Another small tip from us, reach out to the investor again after a couple of months and share key statistics like how your team has grown, your growth traction as well as how you have incorporated their feedback and would now be a better fit for their portfolio.
The road to fundraising is a long and hard one, especially in these difficult times, but with these five pointers, we hope that you will find yourself one step closer to securing your next investor!