In the second discussion on Startup Skills at Echelon 2011, investors – (2nd from left) Tuff Yen of Seraph Group (USA), James Chan of Neoteny Labs (Singapore), Willson Cuaca of East Ventures (Indonesia) and William Kilppgen of Tigris Capital (Singapore-based) – shared insights on what they look at before investing in startups.

Looking, not a day above 25 years, James kicked off the session as the youngest investor on stage.  “First impressions matter,” said James.

Amazingly, James shared stories of having met entrepreneurs who ‘insult’ a potential investor just because the latter does not understand the industry. “It’s the job of the entrepreneur to convince the investor of the potential of his business.”

If absolutely necessary, entrepreneurs should politely disagree and move on with the pitch.

James went on to talk about how entrepreneurs should be honest about who they’ve talked to in seeking funding. “The community of investors in the region is very small. Everyone shares notes. It doesn’t help (your cause) to lie or be secretive about who you’ve talked to.”

William and Wilson agreed that the people in a team make a difference to the pitch they listen to. Curiosity, the ability to adapt and having a high energy level is important in a startup team. Compile a ‘complete’ team as much as you can – marketing, technology, business development, etc – make sure all your departments are covered.  

Age does not predetermine whether a team gets the investment. But it does affect an individual’s personality and how he/she makes decisions. These might affect the investor’s impression of a team.

Never underestimate the power of networking. Recommendations from friends or acquaintances of the investor do impact their first impression of you.

The second important lesson of the day was nicely summarized by Tuff, “Tell your story right. Pitching to an investor is very different from pitching for academic purposes.”

Investors are very concerned about dollars and cents. Be precise when describing what you do and how you make money.

When listening to product pitches, investors value traction. Prove that you have put the product on the market for a test. Gather traction and get feedback.

Show that you have a big vision – showcase your potential market right. But be careful of unrealistic expectations. Early stage investors, especially, were once entrepreneurs. They understand the market. Treat them like a partner. Don’t over-exaggerate your plans or you’ll be unable to deliver.

Investors like to hear that a startup team is “real”. Talk about mistakes and good decisions you have made. Share the lessons you have learnt. They value those who are able to listen and adapt relevantly.

Ensure that the team has a good sense of the product. Investors value those who have the intuition to make decisions that can help you propel forward.

Ending off the session with very good advice, the panelists say “Ideas are free. Execution is important. Share and keep testing your idea/product. Allow people to challenge you and give feedback. That’s the best way to grow.”

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