So you’ve got that a million-dollar startup idea. No one has ever done it the way you want to do it and you are certain that it is going to take off nicely. You even have a small but dedicated team at hands already. Now there’s only one big thing that you need: funding.
Funding is one of the most crucial elements in building a successful startup. You need to sustain yourself and your team while building your product and that comes at a cost. There are many ways to get the initial cash such as raising seed funding from friends and family or approach Venture Capitals (VC) firms. No matter whom you ended up raising money from, you need to pitch your idea. And you need to do it really well.
Where can you get funding for your startup?
Venture Capital (VC) firms
Generally, it’s harder to get funding from VCs because they have specific criteria when selecting which startups to invest in, especially if your startup is still in the ideation phase. Here are some VC firms in Southeast Asia:
- 500 Durians — is part of 500 Startups and they invest $50,000 — $300,000 in founders based in or targeting Southeast Asia.
- Golden Gate Ventures — invests mostly in startups that make consumer internet products and services in Southeast Asia focusing on seed to Series B round.
- Jungle Ventures — Singapore-based venture firm that funds startups around the Asia Pacific.
An angel investor usually is a high-net-worth individual with interest in helping young companies to get started or expand. They provide early-stage startups with seed money in exchange for an equity stake in the startup. Here are some platforms where you can find reputable angel investors in Southeast Asia:
- ANGIN — an exclusive group of angel investors in Indonesia with a focus on the growth of early-stage startups through funding and mentoring.
- BANSEA — Asia’s oldest angel investment network promoting the development of angel investment community in Southeast Asia.
- AngelsDen — the organization matches startup founders with experienced angel investors to provide funds and mentorship they needed. AngelsDen is headquartered in the United Kingdom but expanded in Singapore in 2010, then into Hong Kong and Malaysia the following year.
Friends and family
If you’re not ready to showcase your startup idea to VCs or Angel Investors, you can start by reaching to people who are closest to you. There is a good probability that people who care about you on a personal level will support your startup financially. Although the amount might be significantly smaller in comparison to raising funds from VCs and Angel Investors, when pool together, the money raised among friends and family might just be enough to help you kickstart your startup.
So how do you come up with a killer pitch for your startup idea?
1. Identify the problem
First and foremost, you need to lay out the problem that you are solving. What is the biggest issue that you have discovered? Is it really a problem? What is the solid proof that it is an issue that needs resolving? Try to quantify the scope of the problem and connect it with the audience, preferably in the same geographic area where you are currently. Understanding the problem requires you to understand the audience and there are several ways to do that. Utilize tools such as Facebook Audience Insights to understand the problems that your potential costumers face. You can also do audience research by interviewing your circle of friends and networks. Some tools to help you conduct effective surveys include Google Forms, TypeForm, and Survey Monkey.
2. Offer a tangible solution
You need to convince the investor that you can solve the problem that you have identified better than anyone else. More than that, you need to show the investor that you can scale up. What would be different when you and your product enter the market to solve the problem? Focus on that.
3. Layout the potential market size
If you are asking a sizeable amount of money from investors, they would want to know whether they can have a good Return of Investment (ROI). Anything under $1 billion in term of market size is probably not very attractive to an investor, especially in the hyper-growth business. Do your research well and show some exit strategies that can attract investors. It is very important that you do a competitive analysis when defining your market size. VCs and Angel Investors expect you to know everything about the industry and competition. You can use Google Trends and Keyword Planner to help you get started on the research.
4. Explain how you are going to make money
Be concise and clear when revealing your business model in the pitch. If you have more than one revenue stream, explain accordingly. When creating a business model, you need to know your numbers well as in the size of the market, expected cost-per-acquisition, fixed and marginal costs for your business. You should create a basic cash flow analysis for and you can look for some sample templates here. Remember to be realistic and you can get ideas for pricing by looking at your competitors (if any) or by doing a quick survey.
5. Showcase your product
This is the north star of your pitch. You want investors to understand how your product works. It is imperative to test your idea with a Minimum-Viable-Product (MVP) first and record the initial traction. Include those (hopefully good numbers) statistics into the pitch and show the investors that your product actually works and needed by the users.
6. Introduce the dream team
If you’re serious about pitching to an investor, it means you’re committed to building your startup. Investors would want to know who’s going to make this idea a success. Who’s going to make the calls and execute? Having a dynamic team in any startup is absolutely crucial. Have at least two or three profiles in the team section and briefly showcase their strengths and experiences.
The key to a convincing pitch is when people are able to feel your passion and energy when hearing it. No one is going to believe in you if you don’t know for sure whether you can make it or not. The steps above can help you to get started in creating a pitch for your startup. It is also recommended that you ask mentors in a similar industry or friends and family for feedback before sending in the pitch. Ultimately, be confident with your pitch when presenting and show the investors that you are taking the right steps in aiming for success.
Note: the article is originally written for Xzy Lab.