Startup advice from Venture Capitalists

The Startup Rojak, held at The HUB (Singapore) on Thursday 30th May, hosted a panel of three experienced Venture Capitalists (Frank Lee, Wayne Goh & Anand Govindaluri), for a question & answer session providing startup advice to wannabe Entrepreneurs and new startups. There were lots of insights, but a few really stood out.

Investors talking at Startup Rojak

Question: What advice would you give to an entrepreneur sending you a pitch?

Answers: From all the discussion on this point, the essence really boiled down to the following key points:

  1. Don’t send 60 page business plans, especially not by courier
  2. VC’s only get about 3 pages in, if they’re not excited, they won’t read the remaining 57 pages
  3. Presentation is important, it should be punchy & concise and convincing
  4. Know the VC & tailor your pitch to them. A generic (spam) pitch is obvious and will be ignored
  5. Don’t request for meetings without giving any information on who you are or what you’re doing, they’ll probably just say no
  6. Ensure that your project matches the interests of the VC you’re approaching, otherwise you’re wasting everyone’s time
  7. People are really important, VC’s invest in the team as much as they do the idea

Question: What do you think is important in a good startup team?

Answer (Anand):

  1. Diversity (not purely technical, or purely sales, etc.)
  2. An appetite for risk
  3. Teams that have a good dynamic & gel well together, preferably that have experience together
  4. A solid awareness of the macro landscape & the landscape of their industry
  5. Teams with good advisors

Question: What does scalability mean to you?

Answer (Anand):

  1. The team’s end goal defines the upper limit of where the business will scale to, it’s where they want the project to be in 5 years
  2. A realistic understanding & optimistic vision of how the business can be grown
  3. Services are fine, as long as they demonstrate clear competitive advantage or disruptive innovation (ie: reducing a service delivery processes from 13 steps to 6 steps, it’s still a service, but best of class and defensible knowledge)

Answer (Frank):

  1. Directly scalable production capabilities, preferably products
  2. Services might be good lifestyle businesses, but it’s rare that they are scalable

Answer (Wayne):

  1. We’re all about software, because it’s scalable.
  2. Ask how you’re going to penetrate certain markets, analyse your knowledge & plan of attack for them
  3. Software, software, software.

Questions: Is a previous “failed” startup a red flag for an investor?

Answer:

  1. Only if you think it’s a red flag, we see startup experience as beneficial, but you need to demonstrate an understanding of what went wrong – and what you’re doing differently.