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Top tips to find your venture capital partner

Paul Brislen, Editor. 15 July 2016, 9:06 am
Top tips to find your venture capital partner

Edith Yeung knows a bit about scale. She's helped take the mobile browser Dolphin from a user base of zero right through to 150 million and now spends her time helping invest in start-up companies from around the world.

Her keynote at the ITX 2016 conference includes some great tips on how to get noticed by investors, what you need to do and what you need to avoid saying if you want to be taken seriously.

"Don't bring me social networks or platforms, utility apps, browsers, delivery and transportation apps, gaming or consumer messaging. These are all well served already and you're unlikely to be able to make enough of a difference. You might, but it will be very hard."

Edith works for 500 Startups, a venture capital fund that describes itself as the "most active" in Silicon Valley and one of only a few VC funds that will invest in companies outside the Valley.

"Most like to be able to drive over to see what's going on. We're more international than that and around 20-30% of our portfolio are international."

Edith says only one Kiwi company has come through the 500 Startups regime, even though they're now knocking on the door of investing in more than 1500 companies.

"I'd love to see more companies from New Zealand come through. Absolutely."

However, Kiwis should be aware the three hotbeds for development are Silicon Valley, Beijing and Tel Aviv.

"Companies based in these places are seen as being innovative and are more likely to get listened to."

Edith lists here seven tips for those seeking investment money.

Seven Pitching habits for effective startups

Tip 1: Pitch to the right investors - don't waste people's time.

"I don't know anything about green tech or biotech so don't bother coming to me if that's your area."

Mobile apps are Edith's thing so find the right investor for you before you start pitching. Do your homework.

"Does some research into what stages they invest in, what size company, what industry, even what geography. Get a warm introduction if you can - I always prefer to talk on the phone before a meeting and if you've met me at a conference then an email to say hi, can we talk is always welcome. 

Tip 2: Pitch with purpose 

"What is the one takeaway that you want to leave behind? Make sure you get that across."

Edith quotes Maya Angelou who says people always remember how you made them feel so make sure you're hitting all those buttons.

Tip 3: Pitch your story

"Make it short, to the point, and make it a personal story. I talked to one guy and asked what it was they wanted to do. He said make it to IPO and get out. That's not going to make you stand out from the crowd. What makes you unique?"

Tip 4:  Pitch like a Pro

"You've got to know your numbers."

Edith says investors want to see founders and start ups that know the market, know the scale, that have traction already.

"Traction, revenue, downloads, engagement, how many signed partners do you have, do you have a product demo I can see, what's the size of your market, what pain point are you solving. You have to know these things cold."

Edith says too many founders simply don't know the market they're working in and focus too heavily on the technology they've produced.

Tip 5: Understand the big picture

"You are not the first one to think about this market so know your competitors, know your market potential, find out more about the policy settings or legal environment and what impact that will have. If I hear you've thought about all these things I'm ore likely to give you money than if I ask and you don't know."

Edith says New Zealand is well placed as a trial or test market because we speak English, have a mature customer base and can be seen as a proxy for a larger market, such as the US, Canada or Europe.

"Tell me what your strategy is for rollout. If you've decided not to go to the US but to focus on China first, tell me that. Why have you made that decision, what benefit do you see in it."

Tip 6: Always follow up

"When I was pitching I would always send a follow-up email outlining our meeting from the lobby as we were leaving. Let them know you're very interested, let them know exactly what you're looking for. So many companies simply don't follow up."

Tip 7: Show passion and honesty

"You have to be the billboard for your startup. If I don't see the passion in your eyes then why would I invest in you?"

And as a bonus, Edith says "Buzzwords make investors drool" so even though they're cynical and hard-bitten, she says think about the current hot button items. 

They will change over time but currently virtual and augmented reality are hot, deep learning, machine learning or AI are considered worth spending on, mobile live streaming, the internet of things, messenger bots are a new entry and also, interestingly, everyone in the Valley is talking about ad-blocking software and what it means for advertisers.


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