With the count of companies looking for funding to scale their business increasing, and investors keen to see what the Pakistani startup ecosystem will bring them, it makes a ripe market to be in. We have seen many companies being funded by investors but the startup teams must be prepared to be grilled by those who are pouring their hard-earned cash into a business which carries an element of risk. The best thing anyone can do to make their pitch successful is to be prepared. Will you be nervous? Hell yeah! But so is everyone else so just practice some stress-relief techniques and believe in yourself — if you’ve made it this far, you’re doing good!
You can practice the events in ‘your’ control like the presentation but you can’t control what the panel of investors will ask, so there is a lot of preparation required. Don’t be fazed though, here are some questions you are likely to be asked.
Love at First Sight
It may not seem important but the moment you walk in front of the audience, your pitch has started. Investors will understand you’re nervous but be mindful of how you conduct yourself, and if any setting up is required, one person can take lead on making small-talk. Once you’ve kicked off:
- What is your company doing?
- What makes you unique?
- How large is the market for your company/product?
For obvious reasons, the team is of great interest to the investors. They want to see a close-knit team with good skills and product knowledge.
- Tell us more about the founders and first hires.
- Team education?
- What motivated you to start your company?
- What related experience does the team have?
- What roles do the team play?
- Any key positions that are vacant, why?
- What is the hiring plan for the next 9, 12 months?
- Who would buy it?
- Why is your company suited for a high growth potential?
- How much percentage of the market do you wish to capture in the next ‘x’ months and how do you intend on doing this?
- What sources have you used for your research?
The Golden Egg
The golden egg, be it your product, idea, or service is what this whole pitch revolves around so this must be 110 per cent spot-on.
- Tell us about your product and its key features
- Show us your product in action
- How many iterations of your product have you been through, and what have you learnt?
- What is your ‘hot’ feature?
- Estimated total spend to deliver your MVP?
- You’re lovely people, but why would ‘I/we’ buy from you?
- If your product is in the market, what is the feedback?
For all businesses, income means the wheels keep spinning. Its essential you nip this in the bud and manage your financials perfectly.
- What is your to date sales, profit, loss, expense (any that apply)?
- What are the metrics that you as the founder/co-founder focus on?
- Have you had any loans/grants?
- What is your estimated total ‘burn’ before you start seeing profit?
- Are you offering employees stocks? Other options?
- What are your projections for the next 12, 24 and 36 months?
- What are key assumptions you have based your projections on?
One of the biggest hurdles to your success is the competition and investors are interested in them too.
- How easy will you be able to enter the market?
- Who are the big boys in the industry? What market share do they have?
- Why would a customer leave them and come to you?
- How do you compare to the competition in prices, performance and product/service?
- Apart from being in the industry, what advantage do they have over you and vice versa?
Its nice to have an excellent product but you need to be confident that you can market it well. Great marketing is very-often the biggest reason for a successful product.
- What is your digital and print marketing plan for the next 6, 12 months?
- What is your social media strategy?
- What is the cost per customer acquisition?
- Any PR planned?
- What is the lifetime value of your customer?
- Have you tried focus groups? What were your findings?
Company’s Adoption & Traction
Show them that the world wants your product/service and they’ll show you the money.
- How many customers do you have?
- Do you have repeat customers, and what is their repeat-purchase cycle?
- What is your churn rate?
- Website traffic stats?
- Social media engagement?
- Any social influencers involved?
Formalities, Risks and Patents/Intellectual Property
This is very important. Nobody wants to invest in something that will die an early death due to legal/regulatory issues. The same applies for potential patent infringement.
- What legal / regulatory hurdles do you have?
- Any other risks to business?
- Any potential legal changes that may affect the business-model
- Do you have any patents acquired or pending?
- If any, what jurisdiction are they in?
- Would any previous employees have claim to the IP?
- Are you confident that you are not infringing any existing IP and patents?
- Do you have any plans to acquire any IP/Patents from distressed companies?
The End Game
A lot of companies will have an exit strategy, this usually means there is money to be made so investors will see you prepared on this matter as a positive.
- Are you in any, or have you been in any acquisition talks?
- If your company is acquired, who is most likely to do so?
- When do you see this happening?
- Would you go the route of initial public offering (IPO) or Mergers and acquisition (m & a)?
All of the above was more or less about your company. This is the final section and revolves around the benefit of the investors.
- What will the money be used for?
- Are there any existing investors in this round?
- What is the company valuation?
- What is the total you wish to raise?
- How much equity is being held and by whom?
- How much equity is being offered?
- Will you need further investment?
- Has an accelerator / incubator invested in your company already?
That’s it folks! Yes, I know there is a lot covered, but you are asking for a lot too. Be prepared for the above and your responses will bowl them over.