In this three part series, we catch up with the CEO of Zomato UK, Kimberly Hurd, to grill her on what key skills the new generation of tech entrepreneurs need to survive in the post-recession world.
Having an original idea and a well thought out business plan is not enough for investors. Venture capitalists will also base their final funding decision on you as a person. But what does that mean? What sort of person do they want you to be?
Food discovery start-up venture Zomato, successfully raised £28 million in funding in 2013, and has pulled in £32 million overall since its inception in 2008. We caught up with Zomato's CEO, Kimberly Hurd, after her talk at (opens in new tab)Startup Grind London (opens in new tab), to discuss what Zomato did to win over investors. Or in other words, what exactly you need to do to get funding for your startup.
Kimberly explained that one of biggest mistakes young start-ups make is using heavily optimistic and over inflated numbers to lure investors in. The reality is that most investors have been in the same shoes as the young start-ups. However, they have now had years of experience running businesses and can see straight through over inflated figures.
Their years of experience have taught these investors exactly what it takes time for a business to grow and start earning. Respect their experience and trust that they understand a business takes time to grow and begin earning money.
Honesty is rare, courageous and highly admired by investors. Why? Because being honest includes acknowledging and accepting your weaknesses. The majority of us human beings are too proud to admit them. We think it will damage our reputation. In actual fact, it increases our credibility and authenticity.
Authenticity is key to building a strong rapport with someone in both business and personal relationships. When you meet with investors you are creating a relationship. All healthy relationships are based on honesty and being comfortable being your authentic self.
Honesty with investors brings an extra advantage, it is key to building strong rapport with them. Investors are banking on both you and your idea achieving their potential, so good communication is essential for on-going (and potentially further) investment.
Know exactly what you need
With each round of funding, every cost must be accounted for. Sadly not even start-ups are immune to Murphy's law so be sure to plan for everything that can (and will) happen. Contingency plans demonstrate a solid attention to detail and indicate that you've mitigated and business risks by thinking through them. The fact that you've maintained your enthusiasm for the project despite your ability to be realistic is a huge bonus to your investab-ility.
You need to know what you're looking for in an investor. Kimberly shared with us one key to Zomato's success; the relationship it shares with its investors. Your investors may be with you for the next 10+ years, so it's important to find people who not only understand your enterprise and business plan but also how you operate as a person.
Do the rounds
Kimberly gave us three top tips for fund raising preparation:
Be practical: As we mentioned before honesty is key to getting investors that you'll work well with. A big part of that is ensuring that your proposal can be practically implemented and that you've accounted for any pitfalls along the way.
Understand the market: Find and fully analyse your direct competitors and those with a similar product: Why is your product better/worse? What features does your product have that's unique? What features are you planning on adding? Similarly identify market trends and look at the history of how your industry got to where it is today. Ask "why" the things that succeeded did and why certain ideas and ventures failed.
Answer the question "why you?" One of the hardest things for us to do is be nice about ourselves but, as previously mentioned, investors are putting their money into you just as much as your enterprise. Answer the questions like: Why are you the one to do this? What do you have that no one else does? How are you going to succeed?
Once you've created an in-depth business plan and proposal, pitch to the right people. Start with friends and family and work your way up. Once you've been through a couple of financing rounds and proved that you can keep your head above water investors will start calling you.(opens in new tab)
Finally, keep your integrity. Kimberly shared a story with us about Zomato's origins in India. In the first round of funding the original founders Pankaj Chaddah and Deepinder Goyal were frantically searching for investors and at the time promotional coupon websites and apps were becoming incredibly popular in India.
A number of investors said that they'd invest only if Pankaj and Deepinder changed their business model to a promotional coupon based site. Despite their need for investment Pankaj and Deepinder stuck to their guns and found investors who believed in the product that they wanted to create.
The business benefited immensely from investors who understood the product they were investing in rather than investors who didn't truly believe in Zomato.
The big pay off
The theme that ran through our interview with Kimberly is one of relationships. She never once spoke about "wowing" investors or showing off. What she did tell us is that when finding funds you need to be straight up with potential investors and that you should expect the same in return. Finding investment is just as much about finding people who understand you and your business as it is about finding money.
Check out part one (opens in new tab) of our insights from Zomato where we learn exactly what CEOs look for on CVs or part three (opens in new tab) which reveals what you need to do to attract and retain talented people.
Image credit: Startup Grind (opens in new tab)