After Getting Rejected by 30 Investors, Here Are Things I Learned
Publicity and finance are two inseparable pillars that keep a startup flying high. However, only a few, really a few founders enjoy sufficient financial resources ever since they start their venture, whilst most of them lack of these facilities. Unfortunately, stricter competition has forced them to spend big from the very beginning in order to survive, regardless on whether they possess the resources or not. Knowing this fact, what can founders do to make sure their startups are staying alive?
Does a startup must get funded to be successful?
Not really. There are respectable number of startups which went bootstrapping and enjoy huge popularity, some, like Envato, 37Signals, Mailchimp, and Kaskus, even suceeded in luring hundred thousands of loyal users. Those startups’ stories proved that bootstrapping is a possible solution, even though in reality bootstrapped startups will not enjoy the same growth as those which get invested.
Investments often come in a bundle, along with business tutorial or guidance from the investors. In addition most of the investors have a network of connections to other investors and bigger brands. For first time founders, these are extremely invaluable!
However, good things are hard to get. Thus, to know the investors’ criteria on how an ideal startup would be would be a great benefit. Below are the ones shared byTakahiro Suzuki, CyberAgent Ventures Indonesia’s General Manager:
- Whether its products/services can win the local market or not
- Possessing the potential to grow the business much bigger
- The originality of its business
- Having rational business strategy and scenario
- Implementing Business and strategy management structure
- The founders
If you can meet all those six requirements, then investments will come to you.
Sribu’s Journey to Get the Seed Funding
Six months after our launching, in February 2012 Sribu receive its seed funding from Singapore-based East Ventures. Surprisingly, the process was considerably simple, and East Ventures was the very first investor I went to.
We were a pair made in heaven. Soon after the first meeting, we were awarded the term sheet, approved valuation, and ratified MoU. Even though, I met with other investors, only East Ventures that had the real intention of investing at Sribu.
Although it seemed pretty simple, I learned my lesson; it wouldn’t be that easy to convince investors to put their money on us and gamble.
Thirty (30) Pitching Sessions to Series A Funding
After a good first year and blossoming traction, I started on browsing for investors in order to take Sribu to the next level. I didn’t have any slightest expectation that I’d do things that I did nine months later after going out to start the quest. It was a nightmare..
During those nine months, I pitched to 30 investors, new and old, local and non-local. I went from one place to another, brought along my laptop everywhere, went with the same pitching deck way too many times that it was perfectly planted on by brain, and answered the same questions over and over again.
Some of the investors required the third or fourth meeting before giving their final decision, some did not even give me their definite decision; and I was left hanging. As a single founder, I could only get in touch with up to three investors at once, as I too had to take care of the business. Every investor has their own requirements and perspective, forcing me to prepare unique presentation for every different investor. Only then I knew that establishing the investor relation is a full time job.
Ironically, doing it repeatedly had turned me into a hater of pitching activity. However, I still had to do the same annoying routine to keep my business rolling. Capital injection is fundamental.
How did I feel when I got turned down by many investors? It sucks. Sometimes I doubted my own products. Is Sribu actually attractive enough or is it me who lacked of the ability to convince people? So many of doubts and despair.
After series of disappointment, Sribu finally found the light. In February 2014, right two years after the seed funding and a year after I started browsing for another one,Infoteria decided to put a series A funding at Sribu and we have since started building our second product Sribulancer, an online marketplace to find talented freelancer fast and effectively.
There are four valuable lessons that I could draw from my experience in fighting for investments:
Without having a positive growth trend, it would be extremely difficult to get investments. After securing our first funding, startups must directly invest the fund to boost their traction (growth). The better your growth is, the sexier your company will be in the eyes of investors.
Every country has each own economic condition. In the U.S, where there are more investors and the economic is more stable, startups can easily get invested. In Indonesia, we don’t have such privilege. Life is harder here. Thus, the timing of searching for investors depends highly on whether the ecosystem in the country is ready or not and whether the national trend is positive or negative. If everything is positive, there’d be much more money coming your way.
3. Compatibility with Investors
I shared the same vision with Mr. Willson Cuaca of East Ventures and Pina-san of Infoteria. We always pursue win-win partnership, we don’t want to be the only party to benefit. Therefore, the process wasn’t that long for Sribu to partner with East Ventures and Infoteria, since we clicked since the very beginning.
Often being forgotten, luck actually plays a significant role in this matter. As for my experience, I crossed path with Infoteria when the company was in the process of expanding outside Japan, and got introduced to Pina-san through one of my friends. It all happened only in three months, luck was the only answer to that coincidence.
Getting investment is indeed challenging. Prepare your presentation really well before meeting investors. Good luck!
“What doesn’t kill you makes you stronger” – Friedrich Nietzche