Thursday, March 13, 2014

Preparation Before Pitching

Getting funding for your startup is not an easy task, especially when you don't have prior experience before venturing on your own. Most of the time in Malaysia, we depended on our own savings or on rare occasion, getting some soft loan from family.

However, for those who like to challenge this norm, pitching to investors who are like-minded and can value-add to our venture will be the way to go. From my experience, investors may like the concept and give good response during the meeting. The challenge comes in the later part when it is time to inject the fund.

Here are some tips on pitching to investors for funding extracted from This article listed 4 topics that we need to master and present convincingly in order to win the investors attention. Focus on them and pitching will be a breeze.

Our strategy is sustainably differentiated
What's special about your company and how you'll keep that strong position
Show that you have something different from the pack

We are the right team for this endeavor
For early stage companies, the team is the most important aspect an investor considers.

Our business model will make money
You have to show how your business model -- the costs to acquire and serve customers -- will be profitable. Understand the margin structure of comparable companies, and show how you will track versus their paths.

Market size
For the nascent markets startups, since there is no current market size, so focus on the total addressable market (TAM). TAM measures the potential annual revenue for your industry.

At the product level, it is also important to make sure the concept or product we are planning to push to the world has been well thought of and researched. Here are some crucial questions to tackle in order to get the right product out. These are also the things investor would be interested in as well. So get yourself prepared to explain clearly during your pitch.

Concept: Is it a good idea? 

  • Is there a need?  How significant is the need?
  • How much competition currently exists in this space?
  • How large is your potential customer base?
  • Do you have a unique ability to provide this product/service?
  • Do you have experience/passion in this area?
  • Are there trends in the marketplace/industry that might make my produce/service more or less attractive going forward?

Execution: How Well Can You Execute the Concept?
  • How will you provide great customer service?
  • What is the quality level of your product/service?
  • How efficiently can you produce your product/service?
  • What is your time to market?
  • How is your product/service produced?  Fulfilled?
  • How easy/difficult is it to market the product?

Profitability: Is Your Business Model Profitable?

  • What is your cost structure?  What are your expenses?
  • How much does it “cost” to gain a client? 
  • What is the anticipated demand (quantified)?
  • How will you sell? Online, brick and mortar, using party concept, through resellers?
  • Are you focused on B2B or B2C selling?
  • Are you selling to individuals or groups? Bulk or individual products?
  • Are you using a franchise model?
  • Are you selling products, services or both?