Are you a tech start-up? Here’s how you can crack that funding pitch

UPDATE:

Remember the first time someone showed interest in your Start-up? Remember the feeling when someone used that app you developed and actually liked it?

Now, try and remember the first time your teacher pulled you up and told you to stand on the bench. Recall that one time when you couldn't wait to get your hands on that playstation and your parents cancelled your pocket money?

Well, that's exactly how pitching for funds feels like, doesn't it? On one hand, you can't contain your happiness knowing that this one meeting may change your life forever and on the other hand you are a nervous wreck and can feel the floor beneath your feet slipping.

The Indian Tech start-up space is booming and how! According to industry body Nasscom, known for its 10,000 Startups initiative, our country has more than 3,000 tech start-ups alone. In response to an email questionnaire, Nasscom claimed that "Technology startups for their utter scope and with their remarkable applications and numbers have shaped the backbone of the ecosystem which in turn is playing a key role in the growth of the economy". The Nasscom report also goes on to describe how Bengaluru and Delhi are 2 of the hottest hubs for growing technology start-ups. So now you know just where to head to kickstart your start-up.

But, before you go ahead and pack your bags you need to be prepared to face the wrath of potential investors. Contrary to what you you may think, grabbing that initial round of funding is not a piece of cake. For every 1 successfully funded start-ups there are atleast 10 that tried and failed.

So buckle up because we at Digit spoke to investors & advisors and decided to give you a crash course on how to crack that funding meeting and make your tech start-up stand apart from the crowd.

Define Your Goals & Be On Your Toes
 

Don't overcomplicate your pitch

"The most common mistake start-ups make is that in their excitement of presenting their product, their presentations are not really thought through. There are too many descriptions and start-ups are usually not clear on their requirements from the VC," says Abhinav Mathur, Chairman – Founders Catalyst & Ex CTO – Spice Global. Mathur is an active investor in start-ups and has put his chips in technology start-ups such as EduPosse and Locktimes.

Someone wise once said, "When in doubt, leave it out." Same goes for start-ups. Weed out unneccesary data points and statistics. The big-shots do not want an overdose of information. Most founders feel their products and ideas are brilliant but it's very important to know whether your business is VC-backable or not. That's where knowing your funding requirements becomes key.

Know How Much Money You Need & Why You Need It

Keep track of your funding money

There's no such thing as a free lunch. VCs don't just have to like your idea but they also need to know the exact figure they are expected to invest in your business.

Observations from a report co-produced by Nasscom & Zinnov indicate that India's early stage tech start-up funding ecosystem is 50-100 times smaller than that in the U.S. domicile. India also ranks 142 in the world rankings for ease of doing business as compared to U.S. which stands at number 7.

"They (start-ups) don't try to figure out what they need the money for and confuse their investor accordingly. As an enterprenuer you are always confused. You think if you get Rs. 3cr then it's great and if you get Rs. 1cr then also its good, but having the sense of how much money you will need and what you will do with it and what kind of investor is better for you helps you have those conversations better," advices Pranay Gupta, Co-Founder – 91springboard, a co-working hub for startups.

"The main thing to consider is avoid taking more capital than you need, which will help start-ups to be more accountable," says Nasscom. According to the industry body, it is crucial to refrain from asking for an ureasonable amount.  It is also important to know your VCs and their capacity to fund. If the size of your potential VC fund is small, you cannot expect a big payout. Hence it is vital to do thorough background checks of the VC fund you are pitching for.

An App A Dozen Keeps The VC Away
 

Differentiate your ideas from others

"If there's a Whatsapp already and I do another Whatsapp for India and I have no idea of why it will be better, then I shouldn't be an enterprenuer in the first place," says Gupta, and we agree.

Our country has many tech start-ups that are simply replicating business models from already existant native start-ups or from successful international start-ups. Take for instance Zomato and FoodPanda, Whatsapp and Hike, Peppertap and Big Basket, Flipkart & Amazon, the list is endless.

Now, even though these start-ups are similar in nature, they have all demonstarted something that caught investor attention. "Idea, traction & team are key," says Mathur. While a winning idea is absolutely neccessary it's also important to differentiate that idea from the million others present in the ecosystem. This is where implementation becomes the game changer. So, Even if you have an idea that coincides with another's, think of unique ways of implementation and make that evident in your VC pitch.

Pitch a solution for a real world problem

“The perception is that most tech start-ups dont understand their product. The first round of funding is a very different game. The one thing I would pitch is a worthy problem that needs a solution,” says Bala Girisaballa, Partner & Practice Head at Zinnov.

Girisaballa has over 20 years of experiece as an enterprenuer and technologist and he feels that start-ups need to pitch products that make sense and can solve real problems rather than pitching something that's been done to death. Nasscom could't agree more and said, "It appears like the best problems to solve are ones that affect us personally. Hence, one should look for problems that surrounds you. Differentiation is not something that you invent once and you are over with it. Given that businesses are living organisms as your startup grows your differentiation must evolve as well."

Problem solving is key to a technology start-up and can become the highlight of a pitch. So, if your product does not address a real challenge, it is likely to fail at first attempt.

Flaunt that B-school Degree

Good education goes a long way

Most start-up enterprenuers have great educational qualifications to boast. Stressing on the importance of a strong background, Zinnov's Girisaballa says, “We look for strong experience, somone who has been an enterprenuer in the past, has worked in an MNC and has lots of first-hand experience. Either you come from a good college pedigree or have skills to navigate a problem.”

Highlighting your pedigree is as important as selling your product. If you are pitching for funds for the first time, remember that people bet on people. “You never end up with the same product you started from,” notes Girisaballa. Hence, it's important for the investor to know you and what you stand for before knowing your product.

Dress to Impress

Casual can also be sophisticated

Last but not the least, "no meeting with a potential investor should be treated casually," advises Mathur. Yes, the start-up culture is highly influenced by pop-culture but an investor meeting may not be the right place to display your collection of superhero tshirts and torn jeans. So, suit up and cut those unkept fingernails because when it comes to money, shabiness is a big no no.

We hope this cheat's guide to cracking your first funding meeting has been helpful. Keep those ideas fresh and the world can be your canvas to paint.

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Adamya Sharma

Managing editor, Digit.in - News Junkie, Movie Buff, Tech Whizz! View Full Profile