Top of mind for every startup founder: How to take an initial idea and turn it into a funded, functioning company; i.e. succeed. Most often, this success is attributed to the relentless, unwavering hard work of its founder(s). While this is true, it’s a very topical answer, and borders on being a cliché.
We wanted to understand what a founder is doing on a daily basis and get an idea of how they’re spending their time and energy. So on May 30th, Cogni and Pitchbook gathered a panel of experts to delve into this important topic and dig below the surface to provide clear definitions of this “hard work.”
The panel consisted of 3 important stakeholders in the success of a startup; a founder (Archie Ravishankar, founder/CEO of Cogni), the leader of an accelerator (Jon Zanoff, Managing Director of the TechStars Fintech Accelerator), and an investor (Peter Sung, VP of Private Equity and Credit at Hanwha Asset Management). The panel was moderated by Laura Keller, a New York-based finance journalist, formerly with Bloomberg and AssetTV. They each brought a unique point of view to the conversation.
Here are a few highlights from the conversation, as well as deeper recommendations on how founders should invest their energy:
Know the room you’re pitching to -- The initial research and planning before a pitch is essential. According to Ravishankar, gaining investment requires strategic alignment between the startup and the individual investor. Both sides need to have a mutual interest in the category, and since it’s a long term relationship, there needs to be chemistry and a personal connection from the beginning.
Be flexible and be prepared to take a lot of feedback -- Don’t get put off when you hear conflicting opinions from 2 individuals at the same fund. A lot of times investors will purposely take an opposing view just to see how you react, says Sung. It’s important that you take feedback and questions seriously not personally and are prepared to be tested, added Ravishankar.
Investors invest in lines and not dots -- Be ready to back your idea up with data. Zanoff says investors want to know why your business is viable and how it will function. If you don't have data to support your idea then you’re not ready to be out pitching.
Know how you’re going to market -- Zanoff says, while this may sound simple but it’s something that many startups are challenged with. If you’re a B2C company, then walk into the meeting ready to discuss your customer acquisition plan, and if you’re in B2B, you should know how you’re going to build your enterprise pipeline.
Be diligent, persistent and demonstrate progress -- Just because an investor isn’t responding doesn’t mean they’re not listening, says Sung. Investors are inundated with hundreds of cold-pitches and deal opportunities. It’s impossible for them to respond to each. But founders shouldn’t take a lack of response as a lack of interest. Instead, as founders continue to follow up with investors, they should continually provide updates on their progress and what they’ve accomplished since they last reached out. “In my last message, I told you we were planning to do X since then we’ve accomplished X, and also done Y and Z”
A CEO is a salesman for life -- Ravishankar says that above all his role is to sell. First to investors, then to customers and other stakeholders like media, analysts, prospective partners, etc. It’s important for any founder to know this going in and be prepared.
Always be validating -- Zanoff and Sung agreed that founders must track the milestones you need to reach for the next round of fundraising, and continuously validate these milestones each time you meet with investors. This not only creates consensus but also helps to regulate deadlines and reflect the mood of the market.
Take the time to find smart money -- This is especially important for early rounds, says Sung. Your seed investors should be engaged with your company and help you get to the next level. With limited space in early rounds, it's important to maximize the value of the capital you’re raising -both human and financial.
This was the first of many events we’re planning to host. Follow us on Twitter, LinkedIn, Facebook and Instagram to hear about more events and learn how we’re shaping the future of banking. You can also join our waitlist here and be part of the first group to use Cogni!