Most startups face the same problem: a lack of cash, and this is one of the top reasons that cause startups to fail. As such, getting funding and investments seems to be quintessential for startups to survive. Tan Soon Liang, Founder and Managing Director of TiVentures and Omnibridge, gives insight into what investors and venture capitalists look out for in entrepreneurs, the different types of funding, and his valuable words of advice for entrepreneurs.
What Investors and Venture Capitalists pay Particular Attention to
One of the most important things investors look at is the founder of the startup. Founders that have a drive and hunger for success are attractive to investors, while those who lack passion or a vision are not only disliked by investors, but are actively avoided.
Investors also seek to understand the motivations of the founder. A founder who aims to succeed for the sake of the company is more likely to get an investor than one who is selfish and driven by self-interest. Investors love entrepreneurs that have an attitude that treats money not as a goal, but as a mere byproduct of their determination in their endeavors..
What Types of Funding there are, and What they are Used for
Just to name a few, these are the earliest investments a company will likely try to get, in chronological order.
Angel Investment/ Seed Money: It typically ranges between half a million to two million dollars. This initial funding is used to hire the first round of staff and to create a minimum viable product, commonly known as an MVP.
Series A funds: Typically, this is only received after a company has achieved product market fit and has a dedicated customer base. This money is used to introduce more experienced staff to the team and to develop new products in order to increase the market channel of the company.
Series B funds: Used to further scale the business
Series C funds: The company is trying to bulk up its balance sheet for acquisitions and investment.
What Makes a Good Demo?
People usually feel a sense of pressure to deliver a perfect and informative presentation, but that does not have to be the case. Tan says that the best demos are short, concise, and clearly illustrate the goals for the product, while long, drawn out presentations only serve to confuse and bore. During the presentation, entrepreneurs will find that it is to their benefit to demonstrate an understanding of their target customers.
Final Words of Advice
Tan explains that someone seeking investment should always portray themselves as being confident in themselves and in their ideas. After all, when someone invests in your idea, it is actually you that they are investing in. Someone who seems unsure or insecure of their product would only turn away potential investors. Also, he shares that from his experience, people who are able to befriend and cultivate a relationship with investors are more likely to get an investment.
Have a strategy
Companies, even new startups, should have a plan to scale their business, as well as an exit strategy. Do this by identifying potential investors who would appreciate your product, and structure the company’s business model to work with these potential investors.
Anyone who may be passionate about starting their own business should start as soon as possible. Following the stereotype of the “10% entrepreneur”, Tan suggests that even full-time workers can create an online marketplace as an experiment. And if the online marketplace kicks off, and there is traction for your business, it is possible to make a career change.
Watch the full Arcadier Inspire Summit by Tan Soon Liang here