‘Do your research’, ‘make it quick’ and ‘don’t bullshit’ are some of the key pieces of advice for entrepreneurs and founders from some of Australia’s most prominent tech investors.
The recent ACS Reimagination Thought Leaders’ Summit in Melbourne featured a panel on venture capital as an enabler of growth.
Speaking on the panel, Transition Level Investments CEO Steve Baxter said founders need to get the attention of investors straight away.
“We got about 700 pitches last year and we invested in six fresh ones,” Baxter said. “You’ve got to get our attention. Get your foot inside the door and do your research on what they’ve invested in.”
One Ventures managing partner Michelle Deaker agreed, adding that a pitch needs to be short and sweet.
“We have hundreds of companies every year trying to pitch to us, and only a sub-section get through the door,” Deaker said.
“There’s a limited amount of time so use it well and effectively to get our attention, and allow plenty of time for questions.”
“Don’t walk in with a whole hour and 60 slides and try to present the whole business. Come in and tell us the problem you’re solving, why it’s important, how you’re addressing it and what’s in your technology.”
A good pitch can be condensed into just a couple of minutes, Macquarie Telecom Group chair Peter James said.
“It’s not rocket science,” he said. “It takes three or four minutes to make an impact and after that people’s attention starts to wane. Be very crisp, practice and be authentic.”
[L to R]: Panel moderator Andrew Johnson, Steve Baxter, Michelle Deaker, Peter James, Vicky Lay. Photo: Good Thanks Media
Founders also need to be open about potential competitors and any risks from the outset, Baxter said.
“Don’t bullshit – we’re going to find out anyway and the later we find out, the more we’ll hate you,” he said. “Be authentic – don’t lie.”
And securing venture capital funding shouldn’t be treated as the end game, but rather as a step in the company’s journey, Artesian Investment managing director Vicky Lay said.
“Treat VC like the lever, like the tool to do what you want,” Lay said.
“Don’t treat is as the main thing. Create something with value and leave your ego at the door.”
It’s crucial that founders do their research on investors before they pitch to them, and have a good knowledge of what they invest in at what time, and the values of the firm as a whole.
“We have values and they mean we want to see an impact that’s economic and something that drives some great social, positive change in the market,” Deaker said.
“There are fundamental misunderstandings on who they’re pitching it to and what the investor requires at certain levels,” Baxter added.
“A mistake they make is to not research the investors before they go to pitch. Do your research and ensure you’re going to the right investors at the right time.”
Steve Baxter. Photo: Good Thanks Media.
One of the biggest mistakes that Baxter regularly sees is a start-up that refuses to pivot despite a lack of product-market fit.
“They don’t realise that no-one wants what they’re selling,” he said.
“The journey of business is discovering what people want to buy – that’s a journey of exploration.
“A lot of founders hold on too long and don’t get their product-market fit, and don’t understand the economics that people don’t want to buy it or they can’t sell it profitably.”