StartAD's Fintech Venture Launchpad Creates A Platform For Direct Engagement With Investors
MENA startups, if you’re looking for an opportunity to develop your fintech idea and get up close and personal insights from investors, here’s your chance. Launched by startAD, Fintech Venture Launchpad is a 10-day program providing 10 fintech startups with tools and knowledge to grow their ventures, plus have one-on-one sessions with 10 UAE investors.
Happening on February 18-27, 2018 at NYU Abu Dhabi, early-stage fintech startups focusing on the crowdfunding, peer-to-peer landing, blockchain, algorithmic trading, credit scoring, cryptocurrency, payments, insurance tech (insuretech), money transfer and emerging areas in fintech are encouraged to apply. During the 10-day program, startups would go through ideating, developing viability and ultimately, finding a scalable and repeatable business model.
The one-on-one meetings with the investors will be held on the last day of the Venture Launchpad Program, giving the opportunity for startups to have a platform to pitch their business and build relationships with investors. Erkki Aaltonen, Executive Director at startAD comments on its distinctive advantage: “It is a meaningful way for investors to take a deep dive into the startup and add value instead of judging pitches in front of a public audience.”
On the decision to focus on intensive meetings with investors, Aaltonen notes the reality of Demo Days, wherein most often, the focus is on the best pitch, instead of the best startup. “And [that] brings the next question, what is a win? Startups are interested in fundraising, and hardly any startup has raised VC or angel funding during or because of the Demo Days. Surely some Demo Days or pitch competitions offer price money, but that is no substitute for serious investors and real funding.”
He asserts that this would often lead to startup founders falling to the mindset where they are expected to join pitch competitions: “The reality is that many investors find this disturbing. Founders should be focusing on building their business, not running from one competition to another.” He also points the format of having startups present in front of an audience with a short-timed pitch and short Q&A portion from the judges provides little space for engagement from investors.
“One-on-one meetings with investors allows totally different interaction. This gives founders opportunity pitch their idea directly in a private setting to a potential investor. Our new format of 10 minutes, 10 investors and 10 startups will significantly increase the likelihood of startups raising funding. Most likely not during that 10 minutes, of course, but a good story and a match between founder and the investor will increase the likelihood of a follow-up meeting. It typically requires multiple meetings before investors make positive decision [and] in a private one-on-one meeting, founders can also share information, which they might not be comfortable sharing in a public setting.”
Participating investors besides Aaltonen includes Eshara Capital founder Alex Guy, Enabling Future Investments Managing Partner Hubertus Thonhauser, Digital Spring Ventures Managing Partner Patrick Vosgimorukian, VentureSouq Partner Tammer Qaddumi, twofour54 Investment Analyst Asma Al Qaseer, Krypto Labs Director of Special Projects Pathikrit Banerjee, Crescent Enterprises VP of Corporate Development & Investments Tushar Singhvi, Lead Angels CEO Nick Roberts and Women’s Angel Investor Network founder and Director Heather Henyon. Launched in collaboration with program partners UAE Exchange, Abu Dhabi Global Market, ADCB and IBM, startups will also receive access to its corporate partners, network of mentors and co-working space, online resources, intros to investors and potential seed investment opportunity.
GETTING THE BEST OUT OF INVESTOR DAY
Erkki Aaltonen, Executive Director at startAD
As the program focuses on one-one-on meetings, what can startups do to maximize the benefits from having an intensive meeting with an investor? What’s the best way to build and maintain a relationship with an investor?
“Be prepared. Regardless of the format, one-on-one meetings are not just random chats. Create a well-structured pitch deck, and have your story right. And be nice, at the end of the day, the earlier your business stage is, the more investor is investing in team than a promise of great product and amazing market opportunity.
Know your investor, their investment focus and ticket sizes, and in the best-case scenario find out something about the investor him/herself and customize your presentation accordingly. Check their websites.
Main difference to public event, is that one-on-one meetings allow founders to customize their story. It allows questions and deep dive to a certain specific topic most interesting for the investor in question. Founders need of to prepare amazing pitch deck with clear story on what problem they are solving (and why it is worth solving for) and why they are the best team for the job. But one-on-one meeting allows much more additional information to be shared if needed, so founders should be prepared for these ‘deep dive’ questions as well, and there is no limited how many slides you can add to appendix. This will give founders fantastic opportunity demonstrate the extensive experience and understanding of the business.
Founders should also ask feedback and questions from investors. It should not be a one directional communication, but they should try to create real interaction. Investors might meet hundreds of startups per year, so its pivotal that founders start creating the relationship from the first meeting.
Best way to build and maintain relationship with an investor is to always follow up after the meeting. Share requested materials in time, reply to questions (even if something those might seem pointless or stupid) and often investors don’t care if the answer is 100% correct or not, but how you answer the question will give them extremely important (sometimes hidden) clues about the founders’ personality and how you see the business.
Ask advice, most investors are happy to interact with smart founders. Don’t ask them to do introductions to their network before they feel comfortable about the relationship between you two. Again, asking advice about who to contact, might result them doing the introductions, rather than directly asking for direct introductions.
As it might take long time and multiple meetings before the positive decision, it’s very important to share new relevant information, and show the progress you have done since the last meeting. Again, remind the investor about what have you accomplished since you last met, don’t assume they will remember (but often they do if they are really interested). But don’t try to set up meetings if there is no real progress or real reason to meet. Nothing is more turn-off than wasting someone valuable time.”
According to you, what’s an essential question or issue startups should discuss with investors, but often don’t bring up? And vice-versa, what should investors remember to ask entrepreneurs to make a sound investment decision?
"Startups don’t often ask enough questions about fund, how much they have already invested and what is maturity of the fund, or in the case of angel investors their investment horizon. What this means is that most VC funds have a 10-year maturity, roughly 3- 5 years new investments, and the rest of the 5-7 years as divestment period where they only make follow on investments and are trying to sell the businesses. Similarly, angel investors might have a view that they will need to liquidate their investments within 3-5 years.
Why this is important question: it might take 7-10 years to build a (large, successful) business, and if the investor’s time horizon is not aligned with this, there might be problems ahead. Similarly, if a startup is relying that VC or angel will automatically invest in the follow up rounds, but in real-life don’t anymore have the funds available, there might again trouble in paradise. This might lead to an issue where founders and investors interests are not well aligned.
There is not a single question from the investor perspective that is more critical than other or is often not asked, as the process normally follows the evaluation of the trinity of team, market, product. But I personally like the get entrepreneur’s opinion / reasoning on ‘why this opportunity exists now,’ as it opens up multiple pathways to understanding more about the founders, their commitment and longer term strategic view on the business, trends and markets.”