Awais Bhattee from the IACT19 Committee sat down with Raj Mann, IACT16 alumnus and Founder & CEO of StakOne, to chat about the key indicators investors are looking for when judging startups.
The public perception of people who invest in startups is influenced by reality TV shows like Dragons’ Den and Shark Tank. In these shows, you can observe entrepreneurs pitching their ideas to a panel of high net individuals. And, if the investors like what they see in an entrepreneur’s pitch, they might make investment offers along the lines of “I will give you $100,000 for 20% of your business”, though that only happens if the entrepreneur survives the gauntlet of tough questions coming from the panel of investors. Even though this type of TV gold may be a little dramatised for our viewing pleasure, and does not always reflect the diverse source of revenue available to early stage entrepreneurs, the rounds of tough questions like those from the Shark Tank panel, will exist with virtually any type of funding avenue you seek out, and you’ll need to learn to justify your venture and your team.
Raj Mann, CEO and Founder of StakOne, was not only successful in receiving funding during IACT16 but continued on to receive funding from Griffin Accelerator, Capital Angels, other private investors, and of course, the all-important customers. As such, Raj was the perfect candidate to ask ‘What are the key indicators investors are looking for when judging startups?’.
“You are the product, not the thing you are making,” begins Raj. “You are the one with the domain knowledge, you are the one with passion, and the one who sees a problem that needs a solution.” When investors are looking to put money into a project, they are not doing it simply because an idea sounds amazing. They want to entrust funding to a team that can show they are familiar with the environment the problem exists in and that have the passion to pull it off.
“We spent three months doing market research and gathering evidence of the problems, before we approached anyone with a solution”. Raj saw this as a crucial step in his success at not only convincing his early adopters who were franchise owners (including his boss) to use StakOne’s product, but also in developing a successful solution in areas where other products, that the owners had previously used, had failed.
The accumulation of in-depth domain knowledge, and then gathering evidence to show that customers in the real world were using their solution, paid off. “Actually, we went into the meeting with another franchise owner just to show the product”, Raj recounts, “and he ended up becoming our first private investor into the business.”
‘Success breeds success’ seems to also hold true when applying for grants and other startup funding initiatives. “Our applications had previously been rejected by ICON twice and Griffin once.” Receiving an IACT16 grant provided Raj with the additional validation and further credentials he needed to prove that his venture was deserving of additional funding avenues.
While the affirmation of the IACT grant no doubt played a part, I also had a theory that Raj’s strong work ethic and continued persistence provided him with the time and energy to continue the reiterative process that startups go through to make their solution better and better. While doing research for this blog interview I rewatched StakOne’s pitch night performance in IACT16. During the pitch it was evident that Raj displayed to the judges not only his domain expertise, the results of his market research, evidence that his solution was being used by customers, but also the positive characteristics of an individual that investors are willing to entrust money to.