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In the first six months of 2015, Indian venture capitalists (VCs) invested $2.46 billion into startups. And you’d better believe Indian angel investors are getting in on the action too. So far this year there have been 221 angel investments in India, totaling $120 million. As such, it’s clearly a good time for founders across the globe to consider seeking Indian investment – and there are two categories of startups that stand to benefit the most.
The first are U.S. companies that are solving an Indian problem. For example, we all know Uber provides an alternative solution to a traditional taxi – and India is a prime country for this type of service. In fact, the Indian taxi market is a $6-$9 billion industry, with only 4-6 percent of this market in the organized sector – meaning the rest of the 94-96 percent is by individual operators who own fleets of 2-50 cars and typically have a presence in one city. Uber might not need Indian investment to infiltrate the market, but smaller players in the ride-sharing space should be looking to Indian VCs to fund their expansion, since they’re a source of capital as well as cultural expertise, and the market is wide open. Understanding the Indian consumer is critical for success in this market, so it’s important for U.S. companies to look to Indian investors for guidance as well as capital.
The second group that Indian investors can be particularly important to are India-based startups with global ambitions. Right now we’re seeing a lot of these companies in the SaaS space. Tech-focused startups like Freshdesk, Chargebee, and Visual Site Optimizer, which are founded by seasoned entrepreneurs with previous global experiences are the kinds of startups best positioned to secure investment for expansion. The Indian workforce is larger, more skilled and more passionate than ever before, which allows Indian-based startups to grow at an unprecedentedly rapid pace.
As an active member of the Indian startup community, I’ve helped lots of founders in the on-demand, EdTech, and general SaaS industries prefect their investment pitches. And I played an integral role in securing my own company’s seed and series A funding rounds led by Sequoia India and Accel Partners, so I’ve pulled together some good insights into what you need to know when pitching Indian investors. They actually aren’t so different from their Silicon Valley counterparts – they’re accustomed the more laid back California style and casual address, but the pitch itself is where Indian investors have different preferences. Here’s what you’ll want to keep in mind:
1. If you want Indian investment, you need to go to India. Despite the advent and convenience of various communication technologies, it is highly unlikely that any deal will actually close unless the founder makes the trip to India for an in-person meeting. For an Indian investor, there’s nothing like a solid look in the eyes and a handshake. In fact, if you’re a U.S. company hoping to expand into India, you really need to take a trip to India before pitching any investors. You can’t truly evaluate the market and identify an opportunity for your service/product if you don’t spend some time on the ground first.
2. How you pitch is equally important as what you pitch. This is where cultural differences start to impact things. It’s important that you make your investors feel included. They need to feel like their opinions and professional expertise will also contribute to your company’s success, not just their capital. Additionally, it’s imperative to be humble. Regardless of your past achievements, this is a new venture, and Indian investors don’t take kindly to arrogance. Lastly, make sure you are enthusiastic, knowledgeable, and passionate throughout the entire pitch. Indian investors will not sink a dollar into your startup if they don’t like you as a person.
3. Nail your opening. We all know the importance of a strong first impression, but when it comes to pitching Indian investors, your opening is everything. A lackluster intro is the quickest way to ensure a potential investor writes you off for good – it really is that important. My best advice is to lead with a story or an analogy that explains what you do in a simplistic way. The story should have nothing to do with your technology. It should be a captivating narrative that humanizes your company – whether that’s telling the tale of how your product was conceptualized or even how the founding team came together – it just needs to be genuine.
4. Keep your pitch concise and to-the-point. And when I say concise, I mean 12 slides max (yes, this includes the first logo slide and the last thank you slide). If it takes longer than 20 minutes to get through your deck, you need to tighten things up. I’ve seen founders go on and on with feature lists and architectural diagrams, and while these bells and whistles are nice, they’re unlikely to impact a potential investor’s decision. I know for the technical founder this might be a hard pill to swallow, but it’s true. Where investors will expect more detail is with your ask itself, which brings me to my next point…
5. Be very specific about exactly how much funding you want and what you intend to do with said funds. Saying something like, “We’re seeking between $500,000 and $2 million” is going to leave investors confused and doubtful of your startup’s long-term potential. I’ll often work with a founder on his or her closing after he or she makes the mistake of pitching investors with the idea that “any capital is better than no capital, and I’ll take what I can get.” What we’ll then do is refine the ask together, landing on a specific monetary value and outlining exactly how that capital would be used to grow the company. In these instances, sometimes it helps to take a step back and think, “Would I want to give money to someone who doesn’t seem to have a clear plan for it?” You’ll likely find yourself answering, “No, definitely not,” which is exactly what most Indian investors will say.
The Indian investment climate doesn’t appear to be cooling down anytime soon, and for founders in the U.S. and elsewhere who are seeking funding, these investors certainly present an exciting opportunity. Just remember to be genuine, keep it short, and be specific as you go after Indian funding. You might be surprised with the traction you get.
Sunil Thomas is cofounder and CEO of CleverTap.
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