Seed Forum: 10 Questions You Should Answer when Pitching to Investors

There are more funds than ever available for startups in Southeast Asia – and Indonesia in particular – right now, like the ones from Rebright Partners and 500 Startups. But there is one step that they all must go through to have access to those funds – pitches. I attended a pitch training camp held by UK-based Seed Forum in Jakarta a couple of days ago and found some gems that are worth sharing with those looking to make their pitches to potential investors.

The materials and commentary were delivered by Seed Forum president Steinar Hoel Korsmo who has overseen an ample amount of successful startup pitches to investors during his career. His first advice is to make sure you’re preparing a financial pitch to investors, as opposed to the more traditional product pitch. What investors want to hear is how you can generate cash for them as quickly as possible. What about your company’s noble mission and vision? Perhaps the ones who will be paying attention to that are specialist angel VCs like the Women Angel Fund program that GEPI recently started, not bigger VCs who specialize in series A or B rounds.

After that, Steinar shared 10 questions that you must be addressed during your seven-minute financial pitch:

• What is your business? You should be able to explain this with not more than 15 words.
• Who is your team? Present the main people in your team with a focus on stand-out personalities if there are any, or relevant competence like previous exit experience and financial competence.
• What is the market? This is where you explain who exactly your customers are, how large it is, and if you have a specific distribution strategy.
• What are your competitive advantages? Which problem are you solving for your customer? And what is the market need? You should also make a comparison between you and your competitors in a matrix.
• What is unique? If you have an intellectual property, patent, trademark protection, and perhaps IP strategy, you should also mention that.
• What is your business model? Simply, it’s about how you generate cash.
• What are the key budget figures? What is your financial status? Can you show historic numbers for turnover and profit in the previous three years? Show how they will play out for the next three years.
• What is the capital need and use of invested funds? What are the main purposes of use of your funds. Be careful not to ask for too small of a funding amount. It is better to x1.5 the estimation.
• Are there risk factors? If you include risk factors, you should explain how each of them will be eliminated. Do not include general but only specific risk factors for your business.
• What is the exit strategy? This is the gold. Are you gunning for an IPO (very unlikely for early-stage startups!) or a trade sale? If it’s the latter, you should give an idea about possible trade sale opportunities.

All of the questions above should be answered in 10 or 12 presentation slides, with the ‘666’ rule: no more than six words per bullet, no more than six bullets per slide, and no more than six word-based slides in a row.

(See also: Khailee Ng: Indonesian Startups Should Practice Their Pitches More)

One of the most common questions asked by investors during the pitch is about how much stake that they will get in return for the investment. If you are presenting your pitch to a large group of VCs like Seed Forum’s Investor Matchmaking Forum, you should tell them that you can discuss about that personally later. “Negotiation is a crucial part of the process too,” says Steinar. If you give away your number during the presentation, the follow up questions would most likely be on how you came up with that number in the first place, and you would be stuck answering that question rather than explaining about other important aspects of your company.

What’s in a elevator pitch?

Steinar also gave his tips for a good 30-second elevator pitch. You should only spend 10 seconds to explain your product in not more than 15 words with the rest of the time allocated to what he likes to call “value drivers.” Value drivers are the answers to why investors should invest in you, some examples of these are previous entrepreneurial experience in the team, great net profit, multiple revenue streams, proof of business concept, first-mover advantage, and disturbing exit strategy.

Seed Forum eyeing Southeast Asia

The event marks Seed Forum’s first ever pitch training event in Indonesia. Steinar told me that they plan to hold its Investor Matchmaking Forum in Indonesia next January and that they are gunning to invite a lot of local VCs to join the event. The idea is to circle the money owned by high net worth people into local businesses, and turn that money around. That can help the country develop faster.

Seed Forum will filter out candidates to join the forum through its pitch trainings. They hope to hold three to four pitch trainings in Indonesia regularly in the coming years, with about one to two matchmaking forums being held there. The organization now records 26,000 investors in its database and is present in over 40 countries worldwide.

Besides Indonesia, Seed Forum is eyeing other countries in Southeast Asia too. Among them are the Philippines, Singapore, and Thailand – they’re all on Seed Forum’s agenda this year.