Bikram Seth, independent consultant, and mentor and investor with CIO Angel Network, on the boxes entrepreneurs should tick in their funding pitch. By Shweta Gandhi
Bikram Seth has been working in the IT industry for the last 20 years and has hands-on experience in automating small, medium and large enterprises. As a seasoned CIO, he has a history of progressive leadership experience developing information technology solutions that drove revenue or reduced costs for major MNCs.
He has been an angel investor with CIO Angel Network (CAN) for over a year and feels that the startup industry has become too hyped. “Every 20-something wants to start a business from their dorm room, and they may not even have a vision to begin with,” says Bikram. “In that dream of being an entrepreneur, they don’t think their idea through, and they don’t consider the growth and scalability of their idea.” He stresses that entrepreneurs need to validate their ideas, build a team and have enough funds to sustain themselves. “Because the startups are not mature enough, only one per cent of them are able to succeed. Entrepreneurs need to work hard, they need to take risks, and they need guidance, which networks like CAN provide. They need to see reality,” says Bikram. Here, he tells us the key elements investors look for in a funding pitch.
1. Level headed, practical approach
“Investors are looking for entrepreneurs who are realistic, can bring quality to a business, are passionate about their idea and are committed to fulfilling their plan.”
2. A legit, well-thought out plan
“It doesn’t matter if the entrepreneur comes to us with a formal business plan or a rough sketch of an idea—as long as it’s thought out, it works for us. Sometimes, entrepreneurs who don’t come from a financial background don’t know how to formulate a business plan, and we can help them make one. All we ask is for them to have a team and show early evidence of obtaining traction toward the plan.”
3. Interesting technology
“In today’s world, a startup needs to have a USP that sets them apart. With technology evolving at such a fast pace, they can incorporate technology in a new, innovative way and make that their offering. They should think of different services that would have more potential for their startup.”
4. Potential to grow
“Entrepreneurs need to look at scalability. They need to show us the market opportunity that is being addressed. It’s very important for investors that a startup they invest in is able to grow, for we don’t want our investment to go down the drain. It’s not about the investment; it’s the future we’re looking at, and entrepreneurs need to realise that.”
5. An appropriate valuation with reasonable terms
“This one is a bit tricky. I have asked a lot of people the logic of having a valuation—it’s perceived revenue or the potential revenue that can be earned; but for a startup that’s literally just starting up, it just becomes a bunch of numbers on a piece of paper. The valuation figures need to be thought through and given due consideration before presentation.”
6. Viability of raising additional rounds of financing
“This is true if there is scope for growth in the company and they want another round of funding, or if the startup is being taken over or is merging with another entity. What investors look at is how they gain to earn through ROI and they want to invest in a startup where their money will eventually grow.”