How to pitch your startup: The 5W's investors care about.

I review closer to 500 startup applications per year. 99% of these applications are from Sri Lankan early-stage startups. The balance is from South and Southeast Asian startups. I thought sharing some of my learnings would help future applicants. 

If you're applying for funding, the first thing you need to understand is that we receive hundreds of applications. The goal is to identify the most promising startups. Promising means those that can create value for users, customers, shareholders and investors. What promising doesn't mean is eligible or deserving. It's mainly donor agencies or grants programmes that look for these criteria. 

An investor pitch is different from a customer/user pitch. Entrepreneurs use the same language, the same deck and the same matrices to convince investors. Your product could create a lot of value without your startup becoming very valuable itself. Here's a simple guideline to understanding the investor's decision-making process;

With that said, let's go through some of the basics. 

WHAT

We aim to eliminate the obvious NOs. These are applicants that do not fit the scope, not venture fundable and lifestyle businesses. These applications roughly account for about 20% of the total. The obvious YESs is about 5% of the total. These typically have some level of traction. 

A majority (75%) are those that use too much jargon or try to be poetic. Most feel the need to take this approach, thinking it would increase the chances. Sadly, more often than not, this backfires. We're immune to almost every sales pitch you could imagine. They add zero value to us, and we're nowhere near to understanding what you do. Below are some examples.

A boutique human Relationship company formed to address the day to day challenges faced by companies.

Being the answer to everyone's problem also doesn't help. As a startup, you have limited time and resources. So if you spread too thin, chances are you'll burn out twice as fast. The worst is that you'll not know why you failed. Remember, less is more.

We are a digital technology agency offering end-to-end solutions from Mobile App Development, Web Development, Emerging Technology Solutions to performance-driven digital marketing solutions.

You should also avoid sharing anecdotes from your childhood and how you were born to become an entrepreneur. Avoid sharing theory and cite global reports to overemphasise the problem. Here's an example of a decent pitch; 

A Blockchain as a Service(BaaS) platform that allows anyone to integrate blockchain with their products or projects easily and efficiently.  

I have no clue if this could be as good as sliced bread, but I understand what they're trying to solve. Once WE see YOUR lightbulb moment, I'm eager to learn more about the founders and their experiences. 

WHO & WHY

When the WHAT is exciting or interesting, we immediately look at the team. We're not interested in your qualifications or other credentials. We're looking for a few specific indicators;

In an early-stage startup, founders have only two things to do; build or sell. Most sell how they're developing; this isn't selling; it's bragging. While the growth potential of the idea is vital, the growth potential of the founders is the key. We want to ensure the founders are at the right stage to accelerate their own growth. Sadly, this is something that funding cannot do.  

To this, I also look to understand the motives for why the founders picked the specific problem. 

Why do they want to solve THIS problem? There are n numbers of problems in this world! Why pick this?

I can't imagine anyone committing 5-7 years of their lives to build something without a personal connection to the problem. It's this connection that evolves into your purpose. It also provides the energy for you to pursue your vision and face your failures. However, this isn't a deal-breaker; it's only a sign of assurance. We're more interested in authenticity, audacity, appetite and attitude. 

Ultimately, we seek the answer to the question, 'Will they build?.' Before you get to product/market fit, you need to ensure you have founder/problem fit and founder/market fit. Most of this is intuition, built over a decade of work, seeing hundreds of founding teams pursue the entrepreneurial journey. We have met brilliant teams that have taken a mediocre idea to great success with only a few million rupees. We have also seen mediocre teams raise large rounds and burn through the same.

WHERE & WHEN

The purpose of fundraising is to accelerate your execution. So before you execute, you need to know what and how. To simply put, before you pump fuel, you need to make sure you have an engine. Not every business can accelerate its execution. And not every founder wants to, even if we could.

So our goal is to understand what you're trying to accelerate. The majority of the time, founders are looking to fundraise their go-to-market. One reason for this that we only hear about startups AFTER they have found product/market fit. We rarely hear about startups that are tweaking their business models in SEARCH of product/market fit. 

Building a startup is like climbing a mountain, Mount Everest, to be precise. It's beautiful to look at it from afar but terrifying when you're climbing. So once there's confidence in the team, the next part is about getting to Base Camp and the following campsites. It takes roughly two months to climb Mount Everest. Anything longer than that can be life-threatening, similar to building a startup.

If you're fundraising to reach p/m fit, what would that look like? Who will be using it? Will those users/customers lead you to new segments? 

The goal of a startup isn't to remain a startup. So when we look at potential startups, we're looking for startups that will reach the summit in a reasonable time. Ideally, this would be 3-5 years; realistically, most will take 5-7 years (SL). Hence why planning your journey is so important. What most founders focus is on the amount of their fundraising. Rather than amount, focus on learning how to manage capital and how to use it wisely. 

The most important thing you need to know is that people like me are optimists. We're the ones who will give you the benefit of the doubt and spend most of our time listening to your pitch. Investors come in second; they genuinely want to back the next generation. Your customers and users are the ones that spend the least amount of time. When we challenge you or question your choices, it's because we care about your path. Those who don't won't waste their breath or care about your journey. So be headstrong, give us data and insights instead of opinions.