Investor Is The King To Sail Entrepreneurial Boat In This Pandemic

With the onset of the covid era, while there have been many industries which have had to downsize their strength and affect their usual workflow, entrepreneurs preparing for their investment procedures too have been hard hit. While shelling money form investors have always been a not a pleasing task for entrepreneurs, this pandemic seems to have worsened their conditions. 

With the subsequent layoffs and economic slump, there has been dearth of funds for new ventures to bloom. To a huge extent the apprehension of startup founders is justified of getting a feeling that securing investments from investors was already a difficult task in the best of times — may be even harder than it was pre-COVID.

Investor being the King!

The good news is, there are still investors who are looking for new business opportunities, despite the economic circumstances. However, what they're looking for in a viable startup has likely changed from their previous investment criteria.

Ventures like Paper Boat, Vedantu and many such start-ups from different industries have managed to bring a drift in their pitching deck and provoked the investors to shell out their pockets for these startups to be able to bloom their ventures in such hard times.

When we asked the founder of Vendantu as to how will he be using the funds in elevating the role of online classes way forward, he claimed that “During lockdown, everyone is talking about LIVE classes and it is the best time for us to drive more adoption and strengthen our brand as the best destination for LIVE classes. On top of adding new categories, we will use the funds to invest into content and technology to create the world’s best LIVE teaching-learning experience,” said Vamsi Krishna, CEO and Co-founder, Vedantu.

Gayle Jennings-O'Byrne, co-founder of WOCstar Fund, believes investors will now spend more time on due diligence before committing to an investment deal. They'll scrutinize the team and market potential even more closely than they may have before. In short, they want to be sure your startup truly understands its target client or customer and what the market needs right now, given the current climate.

"The key will be showing how startups can weather up and down cycles, operationalize their plans and, most importantly, capture and defend market share," Jennings-O'Byrne told CO—. "These were all important [factors] in the past, but … [startups will need] to provide a sightline and concrete actions to deliver on these areas."

From “Pictured Pitch” to “Perfect Pitch”

These are times where one needs a far wider reach for both investors and entrepreneurs. Even as physical distancing diminishes, this model of working from anywhere across the world will now increase only. However, it has its own set of challenges: communicating with body language and maintaining eye-to-eye interest are usually not possible and yet the audience needs to be engaged. This demands a swivel—do not present slides! Reading a deck of slides is the perfect formula for disengagement.

According to Tracxn's India-Tech Semi-Annual Fact Sheet, in the first 6 months the total number of deals through equity funding stood at 382 when compared to 380 during the same period last year. However, one needs to remember the total equity fund inflow in the first six months of 2020 was $700 million less when compared to the same period in 2019.
 
 Raj Phani, an angel investor and the Founder of Zaggle, says, “Companies are built during a downturn. This is the best time to test an idea because customers will give you pilots and acquisition costs are the lowest. I look at startups that can show how, for every dollar spent, the lifetime value of the customer increases over a period of time.”

Hence, what will be the “door opener”? It is still the pitch deck—a sharp, clear, focused deck and well-researched. This must provide all the data on market size, competition info, delivery model, financials, team background, risk and risk-mitigation strategy, etc. Remember the format, font, colours, number of slides—all matter. This is what will bring the investor to dial in on the video call. 

At the investor pitch session, it simply doesn’t make any sense to “read” through your slides. As he/she is now in the room, it’s important now more than ever before, to talk through the story with clarity and passion, without looking at your slides as it is a distraction. You cannot afford to take your eyes off your camera, which by the way you cannot turn off. 

It might also be a hindrance to talk to blank screen as most people don’t prefer to switch on their video, but you have to stick to your agenda of pitching for investment in a very subtle manner. As the investor starts to get a handle on your business plan and you are interrupted with questions, welcome these! This is the best endorsement of investor interest. While it is important to answer the questions, it is also imperative to say so when you don’t know the answer—it is your chance to demonstrate integrity.

Virtual pitches need some perfecting: short crisp sentences, delivered slowly, with the right intonations, at the right pitch—you don’t want to be asked to repeat every sentence or be extremely loud. It is good to stop at logical intervals to invite questions, though this does need some good scripting. Investors prefer to invest in teams and just having your co-founder join the pitch is not enough. You need to be weaving each other in and passing the baton amongst yourselves during the presentation. This will need some rounds of dry runs to bring the best out of each of you. Remember, both of you could also be in different locations; so you will need to develop your own cues as you will also not have the advantage of body language. While you may have the perfect closing remarks, adapt quickly: by ensuring you had addressed the questions and promised to respond to the queries/clarifications asked.

Early-stage investors want to add value beyond writing a cheque. It is important to have done some research on your investor: get an understanding of the companies they have invested in, etc. And bring out the value-adds you would hope for from the investor. That’s a huge engagement point and will usually get you the next meeting!

And if you are able to get to investors through shared connections, absolutely go for it! It is a good handicap to start with.