The perfect VC pitch: Here are 3 things you should and shouldn’t do, according to Antler’s Andreas Birnik
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Australia’s venture capital industry got a new player this week, as global VC fund Antler launched its new domestic arm.
Backed by a $40 million investment fund, it’s structured similarly to an accelerator program that provides incubator support for businesses to get off the ground.
The difference is that Antler actually invests capital — $100,000 in seed funding for each project, in exchange for a 10 per cent stake in the companies it supports.
Successful candidates will go through an individual selection process, before joining joining teams where they have four months to build a product and present it to outside investors.
For those who are looking to quit their day job and take the plunge on a startup, it presents a different way of doing business than the standard VC route.
And given Antler’s unique structure, it’ll help to know how to tailor a pitch to maximise one’s chances of nabbing one of the $100,000 investments on offer.
We spoke with Andreas Birnik — a partner at the firm based in Antler’s Singapore office — who detailed the best way to go about it.
Birnik offered tips for both individuals who want to join the program, as well as how to give your business idea the best chance of success.
For starters, here are three things you should do:
1. Networking is good
Espousing the tenets of networking could almost be regarded as cliché at this point.
But the way Antler is set up, things move fast — the time period from joining the program to the first investor demonstrations is only six months. In that environment, it helps for the right people to know who you are.
“One of the best ways to join the program is to actually be introduced to us,” Mr Birnik says.
“We do a lot of inbound references from trusted advisors and key people in our network. So one very good way is if you believe you are a top talent, is to have people refer you who are already in our network.”
“For example, I met some people at the launch this week who told me, ‘Antler has targeted me for the program’. We’re really trying to map Australia’s entrepreneurial talent and let them know that we’ve landed.”
2. CV is key
Once you’ve got the inside running as an individual candidate, the next step is to demonstrate that you have what it takes to become a successful business founder.
And at that point, Antler takes a close look at your work history for evidence of those traits.
“You can kind of see it in someone’s background, specifically whether they’ve held challenging positions or not,” Birnik says.
“If someone’s only held easy roles, they might not be ready for how tough it is to work in a start up.”
For the Australian market, Antler is looking towards candidates who’ve held senior roles in large tech companies, but haven’t yet made the leap to start their own business.
“We want to see a good educational background, a good career track record, and evidence they’ve acquired a lot of key skills,” he said.
3. Tipping the scales
Once you’re in the program with an opportunity to launch your business, Antler wants to see teams that can demonstrate an ability to get their product to market.
“We’re really looking for teams that can build highly scalable companies without using too much op-ex or cap-ex”, Birnik said.
And as a general rule, that means nimble tech ideas rather than capital intensive projects.
“A lot of software companies can scale more easily, because making the first version is expensive but to replicate that costs next to nothing,” he added.
“We’re looking for businesses that have got something clever in the way they operate, so the tech does a lot of the heavy lifting in how the company works”.
Three things you shouldn’t do
1. Bite off more than you can chew
“One thing we notice is that some teams have huge ambitions, and they want to do something that is simply not possible with the amount of funding and the time available.”
The time frames are pretty tight — two months to build the idea and another three months to establish the business model. So companies that don’t manage their time won’t have much to show on Demo Day.
“Rather than have some tangible customers or something, it will be more like a work-in-progress update — ‘oh and by the way we’re out of money, give us more’ — which isn’t super attractive,” Mr Birnik says.
“That’s why it’s very important to understand the structure of the Antler program. People need to be calibrated to the amount of money being invested, and the time frame that’s available.”
2. Get stuck in a bubble
Showing evidence of a finished product is important, but ideally Antler is looking for companies that can get their product to market as quickly as possible.
“We’re looking for early signs of customer validation, and that our companies are actively engaging with customers leading up to the Demo Day,” Mr Birnik says.
“So we don’t want to see them in a little bubble on their own. It’s important to see that active engagement — that they’re listening to feedback and making modifications.”
“Look at it as a relay race – when you get the $100k from Antler, there’s a four month relay to the presentation. And we want businesses who are set up so they can provide something that’s meaningful in the first leg of the relay race.”
3. It won’t make dollars if it don’t make sense
In other words, having a working product isn’t enough. The business won’t be successful unless candidates have mapped out realistic budgets and cost structures.
“Have a business model that makes sense,” Mr Birnik said. “That means being able to understand unit economics — what does it cost to acquire a customer, to service a customer?”
“It’s important that as the business scales, we can see the wheels turning there in terms of cash flow. And we can see evidence that this has the capacity over time to become a profitable business.”