Fundraising occupies most of a founder’s time and energy. An arduous process, pitching isn’t a one-time deal and the founder has to approach different investors, each of whom looks at different metrics and details at different stages.
Chris Sirisereepaph, Partner at the Singapore-based VC firm Saison Capital explains some of the things founders need to keep in mind while approaching a VC.
Several nuances need to be addressed in a pitching session, such as what would make the investor sit up and take notice? What makes them decide to meet you again and possibly fund your idea?
Saison Capital is an early-stage sector-agnostic fund with a focus on Southeast Asia and India. The VC firm is bullish on embedded finance, which is the trend for non-fintech companies expanding into fintech products.
“Our team comes from an operating background and our pitch to founders is that while they are experts in their own verticals, we help them with the fintech component – from product design to finding license partners, launching pilots, and raising debt capital. Our initial cheque sizes are between $500,000-$1 million, and we invest across pre-seed to Series B,” says Chris.
Chris has worked in the tech ecosystem for the last eight years, and has been involved in policymaking, venture capital, and operational roles. Before joining Saison Capital, he used to work at Grab and helped the Southeast Asian ride-hailing company launch financial services in the Philippines.
“What we look for in a startup depends on the stage of investment. We invest in the founding team, pre-product, and pre-team stages,” says Chris.
Founder-business model fit
The early stage is all about the founder’s background, Chris says, adding that the team looks for something that shows a higher probability of them being successful at what they’re doing.
“We call it the ‘founder-business model fit’. If the founder has worked in a particular industry for close to a decade, they would have an unfair advantage in terms of their network and identifying opportunities,” explains Chris.
Another way to look at it is whether they started up before. Chris adds,
“Starting up, regardless of the industry or sector, is a challenging task. It is a big change—mentally and physically—as compared to working in an organisation as an employee. If you have started up before, it helps in understanding the dynamics, how you work with resource constraints, and what shifts you will need to make.”
For Pre-Series A and Series A rounds, Chris says the team looks for product-market fit. While a 100 percent fit may not be achieved, the team analyses the data points indicative of such a possibility. He adds that such an analysis would include monetisation and retention of customers.
Focus on capital-efficient strategies
With the current crisis, Chris says growth at all costs is not the best strategy to follow. “It is best for founders to build more capital-efficient and conservative strategies,” he adds. He also focuses on the need for entrepreneurs to have a roadmap that can tell how soon monetisation is possible.
He advises founders to be aware of what strategies can work in the current environment, and run some pilots to show that monetisation is possible
Founders need to be prepared for detailed questions on how they’re managing their operations in the current crisis.
“VCs will tend to ask more operational day-to-day questions and things like: how do you manage your team, team culture and cohesiveness when everyone is working remotely? Be prepared to answer detailed questions on these,” adds Chris.
“While it may take a long time to close a deal because of factors not in your control, it is easier to get the first meeting, especially with international VCs. Use this time to maximise your relationship building and learning exercise, and not just focus on raising capital,” says Chris.
He adds don’t view a pitch just from the perspective of securing funds, but also view it as a conversation. Chris explains,
“I always encourage founders to interact as much as possible, rather than just focusing on capital. When you have a one-hour conversation with a VC, it is educational. Try to educate the VC of the value proposition of your business and your customers. There is an extremely high probability that the VC doesn’t know your business as well as you do. Patience is needed because you will be required to pitch multiple times.”
He goes on to add that VCs too would have a broader perspective than entrepreneurs because they see a high volume of startups, and many VCs see multiple markets and countries. They would have seen founders operate in a similar business somewhere else or would have invested in a similar company.
“Do your research on the VC and ask them the right questions,” adds Chris.
Qualities in the founder
Chris adds that he particularly looks for a founder’s ability to form opinions in a data-centric way, but also be open to new and changing data sets and opinions.
“There is no room for ego in a founder. Another thing I look for in a founder is high self-awareness. Not every founder is an expert in everything. The ability to identify your personal gaps and hiring the right people to fill in those gaps is a very important quality of a founder,” says Chris.
He adds that a founder needs to be able to hire the right people, trust them to do their job, and retain them.
“On a personal level, I look for chemistry with the founder. Once a deal is made, you are practically stuck together, so you better enjoy the ride with that person,” says Chris.