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How to Pitch to Investors During a Downturn
The Lanturn Team
You’re a startup that wants to get the ball rolling, but there’s an economic downturn. How can you possibly find investors to trust you and invest in your vision? Even if things seem bleak, investors are more than willing to back up the right company. All you need to do is get yourself ready to show them what you have to offer. How? You start by preparing a great pitch.
Singapore During the Pandemic
When the COVID-19 virus was declared a global pandemic by the World Health Organisation on March 11, 2020, the world economy took a turn for the worse. Lockdowns were implemented to help contain the virus and stop infections. But these lockdowns affected many businesses and forced many to close their doors permanently — including ones in Singapore.
With the business sector taking a hit, it also affected the country’s overall GDP. In an
In 2022, the country is doing relatively well, with reports from the Ministry of Trade and Industry saying that the
How to Pitch to Investors in Downturns?
Although the road to finding that one investor may be difficult in a downturn, there are ways for you to turn the tides in your favour:
Research Potential Investors. Most, if not all, investors have certain biases towards specific markets. Some would be more on technology, while others could be more on financial services. To save time and effort, look up what startups your potential investor has invested in over the years and see if your company shares any similarities with them. Another way is to check their investment thesis. If you want to learn
Start Getting Your Foot in the Door. In 2009, the US experienced one of its worst economic declines. The housing market collapsing, high debt levels and ineffective regulations had put the hegemon into its most severe meltdown since the Great Depression in 1929. But did you know that Uber, one of the best-performing startups of the decade, was founded during this recession? Uber’s Co-Founder Garrett Camp did not let the situation dictate his decision to grow his business into what it is today.
Microsoft’s GM for Startups in APAC Michael Smith
Show Profitable Growth. With the economy becoming more unstable with no clear path to stabilisation yet, showing your potential investors that your startup can be profitable would boost your chances of getting their investment. Unlike before, where “growth at any cost” would be enough for some investing bodies, it’s now a different playing field. Startups wanting investors should show or at least demonstrate that their plans can turn up a profit if given a chance. One way of showing profitability is by getting your startup’s Internal Rate of Return (IRR). Check out our blog on
Ask for Less Money (For now). With lots of competition in the fundraising market, you might consider asking for around half of what you had planned instead of the total amount. In a downturn, investors are looking to maximise profits while saving a bit of cash to help dampen the blow of the current economy. Be smart and ask for less than what you originally planned to attract investors. Getting a fundraising consultant can also help set the right amount for your next fundraiser. If you want to learn more about
Present Short-Term Goals. Long-term goals are good to show in pitches as they show the big picture of what your company wants to achieve—but companies should not forget to show short-term goals or milestones when pitching. Why? Because this is one way of demonstrating to investors your steps toward achieving those long-term goals. Yes, you would like to make X amount of money at X date, but what is the company willing to do to reach that goal? You can show that through your short-term goal presentation.
Trust the Process
Although the market is now quite competitive, give it a go if you believe your startup has what it takes to make money and you are confident enough of its growth in the short and long term. Hockey Hall of Famer Wayne Gretzky once said, “You miss 100% of the shots you don’t take.” If you don’t try, you won’t succeed.
If your company needs help in preparing for the next fundraiser, feel free to
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