#3 How to assess your Business Growth
What stage is your business at? This is an important question that affects the resources that you need to request (example, do you need a prototyping space?). In order to maximize what you get out of Pitch Day, you need to answer two important questions:
What are your goals for Pitch Day?
What stage of business growth are you at?
These two questions help make sure you are not wasting the investors' (or your) time who are showing interest in you, and that you'll be able to answer their questions when they offer to be a part of your growth journey.
This is a three part series that will help you achieve your best for Demo Day. After learning about your investment story, we invite you to fine tune your pitch and deck structure, and ultimately answer what your business growth stage is. Our supplementary posts are the Theory of Change helps you convince investors on the essence of your startup's existence, and a look at some examples with our 2020 Virtual Demo Day!
What does success for Demo Day look like to you?
Make it specific: How many investors do you talk to face to face? How many investors do you want you email? How many of these leads are valuable to you? Is there a specific person you want to meet?
Determine 1 to 2 goals for Demo Day that are immediate to your needs and for future needs. Are you actively seeking funding? Are you laying the groundwork for future funding? Are you looking for specific partnerships? Do you need connections to people? Do you need an advisor?
Identify people you want to meet
Before the demo day itself, try to identify a list of people that you want to meet and that you could email them to show interest that you're personally looking forward to connecting with them.
For example: you can consider saying that “Hey, I'm from this startup, I will be pitching in our YSI SEA 2020 cohort. We're looking forward to pitch to you. And also I think the work you do in X, Y, and Z is pretty amazing. And I’d love to connect with you further after the Demo Day.”
Things to do during Demo Day
During the Demo Day, be purposeful.
People are there to listen to your ideas and to see if they can help you or if they can invest. You don't have to go “oh, how's life?”.
Do have a short description to start with as some of them might need a recap.
And have an 'ask' according to your own goals.
A common recurrence among some Southeast Asians is that perhaps we are very reluctant even when the investors are standing there, and there is some sort of interest... but some of us are too shy to be direct.
We can just ask the person who shows interest “we are looking for 50,000, would you be interested?”
That's essentially what investors are there for!
PS. If they say that they are not looking to invest, what you can do is you can ask for advice. People love giving advice.
Keep it brief and professional. When people approach you, it is not your duty to hold the conversation for 10, 20 minutes. You are not expected to make a sale there and then.
As long as they approach you, the important thing you should be following up with is, “hey, can we have a meeting? I would love to discuss this with you in detail”.
What you're talking to them for is to understand what exactly about you that they are interested in so that you can prepare that aspect better and more comprehensively.
Your goal is to secure that follow-up conversation. The more conversations you can secure it better for you.
And also have clear next steps when you're ending the conversation. Don't leave it at “oh, okay yeah. we'll stay in touch”. That means nothing, especially to investors.
Be specific: say that “I'll drop you an email of our deck maybe in the next three days”.
If you can, connect with them on LinkedIn.
How your Stage of Growth affects the types of Capital you're looking for
Why is it important to assess your business growth?
Just because you are doing something doesn't mean that you're going to scale tomorrow to a million audience the next day. It is important for you to know which stage of growth you are at.
So that when you're asking for the type of capital, you don't come across to the investors as if you don't know what you're talking about.
For example, if you are just looking to do some customer validation or user validation, you don't end up asking for a million dollars unless you have a high-tech product or whatever. When you ask for an amount, it has to make sense to the stage of growth you're at.
Navigating pitching as a sustainability impact startup
Your job is pretty hard.
For most startups, they just need to focus on having high growth. They can generate a lot of revenue. Please invest.
Sometimes some of us, impact-making sustainability startups, we fall into this, “oh, we have high impact, but it's very difficult for us to generate growth or revenue”.
And this is not a bad problem.
This is just something that investors do not necessarily want to get into because to them, the returns is also important.
Achieving the Ideal Impact Startup, Quadrant 3, part of the graph is important, and it can only be achieved at a certain stage of growth. Quadrant 4 is where you have maxed out growth/revenue, so it is basically you're multi-million or multi-billion dollar company. Quadrant 2 is where you're the best NGO in the world. You have solved poverty.
At the start, what you’ll be trying to do more, if you're starting from an impact angle is trying to go in to achieve moving from Quadrant 1 to 2, vertically. As for growth/revenue, you probably won't have a tested model yet to show that you can grow your businesses.
Ideally for an Impact Startup, Quadrant 3 is where you can potentially aim to balance impact and revenue.
Think about where you would fall in this spectrum. These are some of the metrics you can use to determine your position along this.
Impact is looking at who our target audience you're impacting as well as what is the theory of change? Unit of change?
For growth and revenue, you'll be looking at your money, operations, revenue, profit etc. It's okay if investors see that this startup is currently at quadrant 1. What you need to do is convince them that you can get to quadrant 3.
And how do you do that?
It is to show them your traction.
You show them the work you have done so far.
Let their optimism guide them towards where you can go.
This determines your vision, your monetary needs, and also where would it get you.
Assess your Business Growth
If you reach out to investors and you are not able to answer their questions according to your stage of growth they could lose confidence in you.
Here are some insights to help prepare you!
According to the Monitor Deloitte's from Blueprint to Scale framework, there are the four stages.
For the blueprint stage, you're mainly looking at understanding your product as well as your customer demand.
At the validation stage, you're testing and refining the business model, or you have a product and you have a few customers and you're trying to understand better how your customers respond to your differences in your product, your prices, and how sensitive are they to the product changes or the price changes.
And at a validate stage, you should be starting to understand your unit model. What an unit model is a financial model: for every one unit of product or service sold, what are my costs, what is my revenue wise, my breakeven and so on. At this stage, it helps to have some mentors to help you start financial modeling your enterprise.
The third stage is the prepare stage for scaling. You have a market and you have enough customers. You're currently consolidating your customers, your understanding of the market, and your unit model so that you can start to scale.
And the last part, scale, is when you roll out the model to reach a large number of customers such as expanding to other regions. As long as you have understood the customer demographic and the consolidation of the knowledge.
Whichever stage you think you are, what do you need to know?
For most of us in the blueprint stage, we need to be familiar with our product viability as well as our customer demand exploration. We have to understand the segments as far as what exactly is the need we are solving for them. These things need to be data-driven.
For those of you in the validate stage, you need to test your market knowledge and your customer demand. There is a needed for customer demand exploration. At this point if you do not understand your customer segments then that is pretty concerning. And you should also start to model your unit model profitability.
Funding and Capital needed according to your Stage of Growth
Once you have understood your stage of growth, it corresponds with the type of funding that you are looking for.
For in blueprint stage, the funding that you should be looking for is a more flexible funding. These include grants, and prizes that are flexible cash. And this gives you the freedom to retain full control of your company while also helping you progress your startup.
For those of you are in the validate stage, you can reach out to patient investors or angel investors.
For those in prepare and scale stage:
Prepare is basically when you start equity and revenue based financing and convertible debt, all this kind of funding includes series A onwards.
Scale stage is when you are actually working with equity funds, structure investment capital, and so on to get series B, C, D...
And just a piece of advice in terms of assessing your business growth, go back and identify where exactly you are at and have some data points to easily include in your pitch or in your networking session with investors so that you are able to better sell yourself
In partnership with Creitive, the Microsoft Innovation Center for Sustainability Solutions (MICSS) program harnesses the power of technology to enable corporate clients and solution providers to work together on creating a more sustainable future.
Microsoft and Creitive are teaming up to provide their support, Microsoft Cloud Platform services, and business connections to early to mid-stage startups that are solving environmental or social challenges within the SG Green environmental areas.
Pitch your sustainability solution and grow your business with up to $350,000 in benefits and with amazing partners
We also have a community huddle happening on November 18 featuring ecosystem players from Tarun Shiroley from Microsoft, Stanislav Borisov from EcoLabs, and Rachel Fleishman from Carbonless Asia who are ready to walk you through the program.
Here are some links that may just help give you an extra edge based on our three years of incubating impact making sustainability startups in Southeast Asia.