How to Pitch to Investors During a Downturn

You’re a startup that wants to get the ball rolling by holding a fundraising event, 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 article by CNBC, Singapore’s GDP shrank by 5.8% in the last quarter of 2020. With international borders being closed and the country being trade-dependent, it puts the country into a problematic situation. But it was able to slowly recover due to the government’s “circuit breaker” measures in early April that allowed the economic activity to resume domestically.

In 2022, the country did relatively well, with reports from the Ministry of Trade and Industry saying that the country’s GDP had grown by 4.4% on a year-on-year basis. The economy’s growth had picked up with the world slowly accepting the new normal — but the pandemic still has investors and businesspeople alike reeling from the effects of the pandemic. Pitching to investors became complicated because many of them are pickier about where to put their money, and businesspeople are taking fewer risks.

How to Pitch to Investors in Downturns?

Although the road to finding that one investor may be difficult in a downturn, there are ways to still get investments for your startup. Here’s what you can do:

1. 1. Research Potential Investors
      Before pitching to investors, you should do some research on which ones you should approach. 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 what is an investment thesis, read here.
      
      
   2. 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. He was able to fundraise during a downturn and successfully grow his business into what it is today.
      
      Microsoft’s GM for Startups in APAC Michael Smith recently said in our Lanturn Forum regarding the global recession that, “if you read the headlines you’re probably going, “Oh my god, the sky’s falling!” [but] If you just go and run your business and not sit on social media all day it might not look very different to you.”
      
      
   3. 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 investments. 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).
      
      
   4. 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. When fundraising in a downturn, consider that 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.
      
      
   5. 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 to investors. 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

Akshay Bajaj of the Susquehanna International Group shared during the Lanturn Forum that there is startup funding, even during today’s economic downturn. With the Southeast Asia economy being quite strong despite the current economic climate, companies can start investments.

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 contact us today. Our team is more than willing to provide tailored solutions to help get you ready.