When we were invited to the Venture Capitalist Investment Competition (VCIC) Asia Regional Finals on 3/3/18 to participate as a startup, we couldn’t say no. An opportunity to practice our pitches, learn how to negotiate terms and rub shoulders with actual venture capitalists(VCs)? We’re definitely in!
This was definitely a most rewarding experience for us. And today, we want to share four of our biggest takeaways!
The Appeal of Social Enterprises
Prior to the competition, we had the impression that compared to deep tech companies, a social enterprise like ours wouldn’t stand a chance.
Hence, it was surprising when we found that our social impact was the most appealing factor to the VCs. Not only were they heartened by what we were doing, they also felt that social causes like ours were worthwhile investments!
This came from many of the students who would go on to become VCs. And our value proposition turned out to be our social impact.
We realised that times have changed and that we definitely had a distinct edge over purely profit-driven companies.
Always Seek Out Like-Minded Investors
VCs will be the ones helping you scale up and grow. They will connect you with the right networks that are key to the success of your startup. What happens if there’s a mismatch between your interests or worst still, your end-goals?
We learned that an ideal VC would:
- See value in what you are creating
- Want to achieve your goals with you
- Have the capabilities to help you achieve the very same goals
So, always be on the lookout for investors with the capacity and interests to help your startup achieve your long-term goals.
Know Your Term Sheet Clauses
Knowing how to negotiate the terms in a term sheet is essential to secure a good investment. The negotiation session at VCIC was certainly helpful in preparing us for such occasions in the future.
How do we differentiate between an agreement that is favourable or not? How can we protect the interests of both the investor and the founder? These are questions that we as founders, need to know how to answer.
If you are planning to raise funds through seeking out potential investors, we highly encourage you to know this skill like the back of your hand! Doing so will not only help protect the shares of the investors and founders, but also ensure that your startup is going in the right direction.
The Team Matters Most
We’ve said it before, and we’ll say it once more.
After a networking session with the VCs, we’ve ascertained this fact yet again. While our profit margin, market size and company traction are key to securing investments, these factors are secondary. Our primary objective should always be building a strong team first.
Your team matters most because you will be the ones bringing the ideas to life. Business ideas can change and your company’s performance can improve. But your team is forever!