So you’ve got an idea for a startup and have a plan to develop it. Now comes the tricky part: finding the money to make the business a reality.
At a startup networking event hosted by The Indus Entreprenuers (TiE) at the Fishburners co-working space in Sydney, three founders of up-and-coming Australian startups offered advice on how to secure an investor’s interest and their funding.
Dror Ben-Naim, the co-founder of Smart Sparrow, is now ushering the adaptive e-learning startup’s second investment round. Amin Kroll and his startup CarPilots are currently seeking seed funding for its technology connecting passenger with taxi and limo drivers. And Bosco Tan, co-founder of Pocketbook, is in the process of raising money for web-based personal finance software that aims to be the Mint.com of Australia.
Here are five of their biggest tips:
- Always be pitching
“It’s all about pitching at every single opportunity,” said Tan. “The most important skill you can have is the hustle.”
“How do you know if an entrepreneur is pitching?” joked Ben-Naim. “If his lips are moving.”
Kroll said he regrets not focusing on marketing earlier in the development of CarPilots. “We really focused on building the company and the product,” he said.
Kroll said he should have talked “more aggressively to VCs and [got] out there more so.”
- Target a big market
Ben-Naim said a startup must show potential investors “a very big market opportunity” and “a market that has pain … a quantifiable problem.” It’s also critical to show one has “a team that can execute,” he said.
“If there’s a big enough market and a huge pain and you’ve got a good team, you know what? We’re going to solve the problem. We would pivot 200 times until we find the product because it’s a good team and a big market.”
Kroll agreed: “It has to be a billion dollar opportunity.”
- Get customers early
Investors like to see startups that already have customers, said Tan. A good way to demonstrate there is pain in a market is to have customers saying the new product is “10 times better than the competition,” he said.
However, it doesn’t “have to be about money,” he said. For example, Tan’s startup Pocketbook is completely free for anyone who wants to sign up; the company aims to implement ways to monetise the product later on.
Kroll said it’s important to have just enough revenue “to prove the point.”
“You need to have some traction,” he said. “Have a product that’s working, even if it’s a basic product.”
- Your story is important
“An investor will look at the business but they’ll also look at you,” said Kroll. “And they’ll potentially look at you more than the business — what’s your ability to execute?”
Investors want to know about a startup founder’s personal motivation for building the business, added Tan.
- Just do it
“Don’t think that you’re not ready,” said Ben-Naim. “You’re ready. Just do it… Set yourself up a meeting with a person and prepare yourself towards that meeting.”
Most of the learning happens on the go, he said.
“Don’t expect to do your homework, learn everything and then go to an investor. Life doesn’t work like that—you learn it on go. You have to have the confidence to go walk into a meeting with a super investor and tell them, ‘Listen, this is something I don’t know. I’m going to do my homework and get back to you.’”
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