This post marks the start of a new content series: “SEA Tech Startup Fundraising”, in which we will discuss everything about fundraising in South East Asia (SEA).
#1 Investor Pitch Deck
Let’s do a simple exercise. While there are a lot of resources out there that teach you how to build a great pitch deck, below is a list of items that I always go through with founders when they ask me for fundraising advice (more of my thoughts here on finding the right VC), regardless of which verticals or stages of business they are in. I will also explain investors’ thought process when they look at pitch decks to provide a more holistic picture.
- What are the pain points?
- Why is there a need to solve this problem?
Investors: Are these founders critical and have they spotted a pain point that needs to be solved? How did they find out this problem? What’s the story?
- What is your product?
- How does your product solve the pain point?
- Why is your product superior? Faster, better UI/UX, cheaper?
- Target audiences and use cases?
- Technology Stack (nice to have)
Investors: What is the solution? How does the solution look like? What is the secret sauce (competitive advantage) and what makes them so great that they will win against their competitors?
- Size: How big are the target market and Total Addressable Market (TAM)?
- Landscape: Unless your idea is truly revolutionary, chances are there are already similar products in the market already. So, what is your plan to differentiate yourself in the market?
Investors: Does the product have enough market potential to scale beyond their early adopters? How saturated is the market now? If the market is not ready now, will it be ready in x years? How much do the founders understand about the domain and the tech startup landscape?
- What is your monthly recurring revenue (MRR) or ARR?
- How many beta/paying clients do you have already?
- Channel partnerships, Letter of Intent, Memorandum of Understanding?
- Survey responses to validates ideas?
Investors: What have they done so far to show that their product is full of potential? How have they gained all their traction so far? Was it through personal connections or pure hustler that they have achieved the numbers that they claim?
Investors: How strong is the business acumen of the founder and what is the realistic timeline/destination for an exit? Are the founders aware of the potential obstacles and challenges? Have they planned how they are going to start making money?
Key Milestone to-date
- Important breakthroughs like hitting X number of clients in Y months post-launch, recruited new key members to join the team, secured channel partnerships etc…
- Prior financing
Investors: Who have they established trusts with? What are the challenges they have overcome to get to where they are now? Are these good enough indicators to make them an investable company? Who did they raise money from in their Angel and Friends/Family round?
- Why do you think your team will be able to solve the problem?
- What is the background of your team?
- Any advisors?
Investors: How do they complement each other as a team in terms of skillset and personality? What is the kind of culture they are trying to build? Do they have any credible advisors to mentor/guide them? What is your leadership/management style?
Investment Ask and Use of Funds
- How much are you raising at what valuation?
- How do you plan to use the fund and what measurable metrics will you use to track these plans?
Investors: Have they done their homework in terms of valuation? Do they understand what it means to raise an external funding round? How will they use my money?
Many resources out there show you the examples/components of a great pitch deck, but they never really quite go into the thought process behind it. After digesting the above 8 points and putting what you deem most relevant to your pitch deck, you will be ready to start meeting investors. Above is merely an overview of how you should prepare yourself before you start raising funds. Founders should always tweak and update their pitch decks accordingly. The sequence of the items above should not be strictly followed, but tailored to each fundraising meeting. For example, some investors like to hear about the “Team” at the beginning.
Before I round up this post, there are two aspects below that are often overlooked by many founders that I’d like to highlight:
Why do you approach that investors? How can they help grow your business? Who are they connected to? This is to show that you have done your homework before approaching them.Yes, even though money is money, but sometimes it’s better to assess your funding options intelligently. Always take a targeted and structured approach when it comes to prospecting for investors. Have a chunky list of investors, then narrow them down by investment stage and verticals (Find out more about the active investors in SEA tech scene), then get warm introductions as much as you can before you hit the cold email streak.
Thinking about this doesn’t mean that you are not in it for the long haul. Planning an exit opportunity ahead of time signals that you know what you are getting yourself into, and you have a clear liquidity roadmap ahead for your financial investors to cash out (Find out more about the SEA Tech Startup Exit Landscape).
More to come! Feel free to reach out at firstname.lastname@example.org if you have any further questions on any of the above!