Written by Sam Keisner, Head of Venture, Startup giants PLC
Read this, take a deep breath and get busy on your concept to maximise chances of funding in a recession.
Everywhere you look right now, you’ll see the marketplace being described as ‘in correction’. This means that company valuation multiples decrease with investor confidence – if investors believe in the business this could mean an opportunity for investors to gain a discounted valuation and effectively more equity for their money. Don’t be fooled by the media, investors are still hungry at the moment – they still have the money to invest. They will also be aware that many talented people will be made redundant during a recession and starting up their own companies, much like in the recession of 2007-2009 which saw Uber, Slack and Pinterest begin …. So the investors are there, they’re hungry, so the onus is on the founders to convince them to spend their money with them.
As a founder you need to be very clear on what kind of investors and investment you’re going for. Are you looking for a relatively quick, AI led investment via online application for £25-50k? Or are you looking for a greater amount, sourced via more traditional investors? As Head of Venture at Startup Giants PLC I prepare founders to pitch to our own pool of investors, so this information is coming to you first hand. Here’s what I would recommend:
Essentials to remember when preparing a pitch deck are:
– Keep your pitch deck to ten pages max within a powerpoint – you have ten minutes with an investor – use every second wisely
– Your financials need to demonstrate planned growth with a full list of costs from everything from stationery and printing through to staffing and development costs
– Keep your financials to one slide if at all possible – tricky to do but essential to keep it clear and cohesive
– Try to have prompts within the powerpoint but not everything that way the investor has to listen to you speak as opposed to simply read it
– Make it memorable – if you can tell your journey and place the investor into it as a consumer whose problem you’re solving then it’s going to be ten time more memorable to an investor who may see twenty pitches in a day compared to the ones that are dry and dull. I share exactly how to do all of this in our pre-funding bootcamp ECHION,
Finally: never gloss over evidence in a pitch
I see it all too many times, founders with really good concepts just waiting for investment to go out and create a prototype. Honest myth busting: it doesn’t matter how basic your prototype is – check both Airbnb and Amazon’s first websites for proof of this – you must show that you have a prototype of your product or service.
Why is evidence so vitally important?
This is so important because contrary to what most hopeful founders believe, investors are looking twice as hard at the founder’s attributes as they are at the idea.
Anyone can have a good idea but not everyone has the mental resolve and conviction to bring it to life. As a founder you have to think tenaciously and sorting out your evidence for your pitch demonstrates this. Whether you use a code-less app to create the MVP (minimum viable product) of your SaaS or mobile app, or whether you negotiate an equity share for a developer to create a basic version of your concept ready for testing, you need to be savvy and build something tangible for the investors to see and try.
Then you need to have trialed out your invention enough to have received feedback on it and have acquired enough people to create a demand for your concept. Demand covers both the need and the will to pay. You need to show the investor that your concept is scalable so some form of seed marketing plan within the user base is essential to expedite growth to enable a quicker return on their investment.
For those founders developing a larger scale tech or product offering for their future clients, where a ‘user base’ would not be realistic, ‘letters of intent’ from businesses who are prepared to pre-order your product are absolutely vital for investors to see.
Now, this might seem like a lot to prepare, because it is. Honestly, it’s no mean feat to achieve any of this, however, that’s the grit and determination that sets you apart from the rest. It’s what you need to do to attain investment and to make it after you receive it. Which founder are you? The proof will all be in the pitch deck and evidence …