Heaptalk, Jakarta – Most startups in the world has to face the reality that 90 percent of them (the majority was the technology-based startup) were failed. Some encountered product fail before they exactly reach the market fit, and the others experienced out of money while the revenue couldn’t grow fast as it expected.
The truth about their death is not representing their failure of both product and business model development at all. Some startup deaths come out of nowhere and can’t be helped, and some are both predictable and preventable. Sometimes their product development can be robust enough in serving the massive user. The other things that may occur like the startup have the active user and buyer, but the business model is not scalable.
According to Wiliam Gozali, Chief Investment Officer of BRI Ventures, there is a secret he tells to any startup founder from an investor’s perspective that funding is a key to keeping a startup alive. He was simply witnessing that the investment is necessary to have.
However, as a startup founder, Willam shared the messages that they should be discerned to attain that. It was about how the purpose of why a startup is formed — the founder neither thinks about following other startups success’ path nor refines the existing business model or service.
“As a startup, never think that your solution is refining the existing or previous solution. It indicates that you won’t be developed. Always think that your products are in the beta phase so that you have the intention to upgrade it continuously,” Wiliam Gozali said.
Four key factors for a startup being invested
Wiliam mentioned the four factors for a startup to be invested, whether they are worth it or not. The four key factors are the people, the market, the product, and the timing.
When talking about the people factor, investors tend to see whether the people inside the startup, including the founder, the management level, and the talent (can also be said the developer, the marketing, the business, and the creative team) are capable enough to be involved in the next journey of an expanding startup.
The people factor is considered the most prioritized factor compared to the other three. When an investor comes to an early startup, most of them have the only manpower assets — with their brilliant idea, capability, skills, experience, and the most important is attitude and commitment. To some extent, it is because, for an early startup or ideation, they may doesn’t have products, revenue, and customers.
The next factor is the market. Most investors are likely to invest in a startup in a growing market. They have their metrics to measure that if they invest in this kind of startup, it will return them potential benefits (Return of Investment).
And the question, is the growing market a definite prerequisite? Wiliam also construed that even the market is small or not existing before, because the startup appears, the market is then formed, can be considered choosable. This market possibly appears due to the high penetration of the internet that is now occurring in Indonesia. Also, the growth of digital adoption is starting to be distributed more evenly across Indonesia. The market, for example, as shown by the absorption of video conference users, was previously followed by a huge demand to support both working and school from home activities (like outside top-tier cities, we can say).
The third factor is the product. Whether the developed product solved people’s problems or not, the investor will see this thoroughly. Is it a vitamin? Or aspirin? If the product is a vitamin, it means the products are “nice to have” but not “need to have”. The startup may deliver the unique value preposition quite well on the market, but people do not think this product is the first choice. Something like If we don’t have this product, we still okay – since it’s like an optional choice.
Unlike aspirin, or “painkiller” in other terms, the startup is classified as it is typically helping their customer to solve their unmeet problems. The customer who finds your startup product categorized as a painkiller may think they want to use your product. At this state, the painkiller startup categories can drive more revenue or materially even if they are lowering their business costs up to 33%, without requiring new budgets and minimum effort to sell the products to market.
“Regarded about the product whether it is vitamin or aspirin, there is almost no definite measure. Because for many people, these considerations are relative. What startup founders need to pay attention to is how they are addressing the highest priority to solve the customer needs,” Wiliam Gozali said.
The last factor is timing. Commonly investors come with the questions like; why you? And why now? The founder has to pitch on this side convincingly, supported with a narrative and evidence to prove that this is the right time for the startup to invest.
When an investor sees the timing, they will find the AHA moment because good timing is most highly correlated with success. Timing also determines the single biggest reason why startups succeed or fail.
“The investor can not see the future. It is the founder’s job. Because if we can see the future, it is better we just make it.” Wiliam Gozali said.
The timing also unchangeable. In contrast, the founder and co-founder can be changed. The key factor is, founder has to be punctilious to see the opportunity. They have to be able to read the trends. For example, the internet penetration forecast in the middle and eastern Indonesia for upcoming years may be interpreted as the prospective factors to build like a Software as a Service, Smart City, Logistics Tech, or agritech on that region.
About the BVI Funding
BVI is the Venture Captial subsidiary of Bank Rakyat Indonesia. BVI tends to see the margin opportunity from the cash flow, as it is part of the business. They also like startups that have a prospective development phase and growth to unlocks other business potentials.
“like Amazon, previously it is an online book store. Then become an eCommerce. Now they manage virtualization platforms and cloud services,” Wiliam Gozali Said.
As a venture capital, BVI tends to invest in the equity model, with the combinations of the loans that are then conversed into equity. Even though they are part of BRI, BVI defines themselves as most likely to the non-finance sector with the prospective business model, market, and timing.
