An investor tells you what you’re doing wrong
By Jay Kim | The world is getting smaller and smaller every day. Through the power of the internet and social media, it’s easier now than ever to connect with anyone who has an online profile. This accessibility, however, can be a double-edged sword.
On the one hand, it can be a valuable networking tool when it comes to fundraising for your startup. On the other, the amount of garbage, noise and downright horrible pitches that are now bombarding investors’ inboxes is at an all-time high.
I’m a partner at a global alternative asset manager that invests in exceptional entrepreneurs who are building great companies in industries ripe for disruption. Every single day, between the four partners here, we receive no less than 20 pitches from young, aspiring startup founders looking to raise money. Sadly, less than 5% of the pitches we receive actually deserve a second glance.
When it comes to asking for money, here are three simple things you must master if you want to stand a chance at fundraising:
“Stalk” Your Target
Knowing your audience is so basic I’m almost embarrassed to include it, but you’d be surprised at just how many people screw this up.
Don’t send someone a hardware startup pitch when they only invest into software or ask a venture capitalist who hasn’t funded anyone in years for money because you failed to read their retirement announcement on their blog. It takes time and effort to conduct deep due diligence, but you can use this to your advantage when personalizing your pitch email or cold call. Don’t be lazy with this one.
Perfecting your pitch is another basic tip that so many get wrong and it mostly has to do with lack of practice or experience. Pitching is nerve-wracking, but if you can’t get that part right, then your audience will lose interest immediately, regardless of how good a founder you are or how brilliant an idea you have.
For instance, if the investor you’re pitching to only speaks Chinese, then don’t go in there with an English pitch. Fundraising is all about your ability to sell yourself and your idea. If you can’t hack it, then hire a marketer who can.
Know Your Sh*t
The entrepreneur should always know more about their product and market than the potential investor. If you’re aiming to be a practitioner in a particular space, you better be prepared to know everything possible about that niche.
What are the long-term structural trends that will serve as a tailwind to the space you are aiming to disrupt? Who are your direct competitors? Why is your team the best one out there to build this company? Nothing turns investors off more than a lack of practical knowledge from a wannabe entrepreneur.
It doesn’t take a genius to come up with a brilliant, game-changing idea. Anyone can do that, but few have the patience, discipline, and grit to execute these ideas and build a great company. The best investors always bet on the jockey (founder), not the horse (idea), so at the end of the day, fundraising all comes down to convincing the investor that you are the right jockey to mount this particular horse.
About the Author
Jay Kim is a Partner at Explorer Equity Group (explorerequity.com). He has over 17 years of experience in capital markets and has been an early stage investor for over a decade. Jay is an active supporter of the Asia startup ecosystem and is the host of The Jay Kim Show, Hong Kong’s first dedicated podcast on entrepreneurship and investing in Asia. He is a regular contributor for Forbes, TechInAsia, e27.co and Thrive Global.