It's not necessary that every fund in the world will be interested in a particular startup, but most of them can guide the startups to reach out to the right people. Here are a few pointers a startup should consider before approaching an investor, and even if they are rejected by them.
Ask for help and guidance
One of the biggest problems is that entrepreneurs are not able to meet the right kind of investors. So even if a fund rejects them, the startups can always request the investors to introduce them to two, three other people who may be interested in their project. No one knows investors better than other investors as their ecosystem is very small. In addition, the startups should also take advice from previous investors on how they can improve their pitch in order to bring out the concept in a better way.
Don't tell me when Google would want to buy you
There are certain things startups say that gives an investor a wrong impression about them, for example, 'Google would want to buy us one day'. First of all, if a startup is only looking for a buyout, most investors would not be interested in it. Secondly, even if that is a possibility, the startups should leave it on the investors.
Time is money, prepare well and have a plan B
If an investor gives an hour to the startup, then they should not spend more than 20 minutes on the presentation. The rest of the time should be spent in conversation. The investors should get enough time to ask questions and get their replies. In addition, time should not be wasted if a technical goof up happens while the presentation or the demo is on. Startups should always have a plan B if their demo cracks down or if there is a technical glitch while they are talking.
Over 70 per cent of the startups who approach us do not know how to manage their time well. Investors expect your demos to work when you are presenting it. Sometime the projector doesn't work, the other times the presentation is not set up.
Know and explain the market opportunity well
Startups often don't explain the market opportunity well enough. This is one of the most important things they should take care of besides the problem that they are solving.
Be positive and clear headed
Investors don't meet everyone who sends them a deck. If they call a particular startup, it means they are interested in something- be it the product, concept or the team. Come with an open mind since even though we may or may not invest in you, there is something in your project that caught our attention.
Come well researched about the fund and the profiles of the individual VCs
Startups should have answers to these questions on the tips of their fingers. What is the portfolio of the fund, what sort of investments they have made in the past, what is the background of the individual VCs. Investors do not go into a meeting without doing their research on the startup. We don't think on the spot to ask questions. So if we preparing, so should you.
What investors look at in startups besides the product
Investors look at startups and ask themselves, do we want to spend time with them, are they the right people, do they energise us, what are the market they are going after, are they the best people, but going for the wrong market which makes no sense?
Been there done that
Most VC s in our country are doing the same things that the startups are doing. While startups have to raise money to build a company, the VC s has to raise money to fund startups. So startups should not give up even if a couple of funds have rejected them, instead they should keep improvising. There is nothing that you can do to possibly ensure something, just be there and tell your story. Don't try and be someone else.
(Siddharth Talwar is a co-founder and partner at Lightbox, a VC firm based out of India. As told to Techcircle.in's Priyanka Sahay.)