How to think like an investor before pitching your startup for millions in funding

Airwallex co-founder Lucy Liu

The road from pitch to investment is difficult for every Australian startup to trek.

Seeking funding can seem like a string of endless phone calls, networking events, pitch fests and presentations to would-be investors.

Coupled with intense competition from Australia’s growing startup community, securing the funding round your company needs to hire talent, expand into new markets and realise its potential, can be quite hard to achieve.

But it’s certainly not impossible.

In January last year, a fintech startup I started with four other co-founders, Airwallex, looked outside Australia and successfully raised $US3 million ($AUD4.1 million) from Chinese based venture capital firm Gobi Partners, to grow our cross-border payment platform that simplifies the foreign exchange process for businesses and consumers.

So how did we do it? We played to our strengths.

It’s important to play to your company’s strengths and seek investors that understand your product and can provide you with accurate advice, set you up with the right tools and act as a mentor as you build your company.

So, with that in mind, here are my top three tips that might just be the difference between a handshake “yes”, and a handshake “no thanks” at your next investor meeting.

1. Choose investors who know your industry

To appeal to investors, you have to think like an investor.

As a former investment banker myself, previously managing a fund in China, I knew that VCs have far more value to add to a business than just capital.

You’ll have a much more engaged audience if you’ve done your research and are talking with potential investors about how their expertise or network would benefit your business goals, as opposed to just their money.

You need to be speaking with VCs that get your business, understand the industry you operate in and the specific challenges that you face.

Ideally, they’ve helped other startups overcome these challenges before.

For a biotech company, you’ll want a VC that can help you navigate the clinical trials phases.

For a b2b SaaS [business-to-business software-as-a-service] startup, it might be helping to get your sales team in with the big end of town.

For a fintech like us, it was about finding investors who could connect us with industry partners and understood the strict compliance and legal requirements a global payments company faces.

2. Present a united front: share distribution is important

While an even spread of company ownership might sound fair and equitable for startups with more than one founder, investors want to see a clear division of leadership in an investee company.

They want to see that the buck stops with the founder with the biggest chunk of the pie, and that one single person will be responsible for any issues that arise.

Dividing ownership can be a challenge, particularly for startups with family, friends or colleagues involved – but fairness is a mentality, and treating your team as equals and with respect regardless of their title is the foundation of a successful startup.

With five founders, we knew that Airwallex leadership couldn’t be divided equally so we drew upon our strengths and took on roles that suited our abilities.

When it comes to decision making, investors need to know that one person will have final say.

It shows that the company is firm and fair, and that the team trusts their leader.

3. Hire the right people, at the right time

Fintech companies require leaders with a wide range of specialist skills and knowledge – from legal and compliance to currency markets and trading.

Investors want to know you have the expertise, but more importantly they want to know you have a high performing and productive team.

In the early foundation stages of a startup, it’s usually the founders that are the experts and the need is for driven, multi-skilled people to support them in getting the business up and running.

We found in our early days, job descriptions went out the window and the priority was finding talented people who are are adaptable and willing to do whatever it takes to achieve results.

It’s often not until the growth stage where strategic hires are needed, but it’s horses for courses, and any savvy investor will know if your team has the right mix of skills and experience and credentials to achieve what you say you will.

For a fintech like us, we had to hire experts right from the get go for the development team and the legal team because we were building a technically complex financial product with numerous compliance implications.

But we didn’t spend money on sales, marketing and operations until recently because there was no business requirement for it.

The key point is not to hire too soon and to only hire what you need now, as opposed to what you may need in the future.

Investors are looking for companies with experienced, well-credentialed talent, who are also flexible and startup-minded.

It’s all about striking the right balance.

Lucy Liu is the co-founder of Airwallex. 

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Lucy Liu is the co-founder of Airwallex where she oversees its ongoing business operations. Previously, Liu was an investment consultant at China International Capital Corp and the Director of Hong Stone Investment Development Limited, a Hong Kong based investment company, where she designed and implemented their financial and operational strategy.