When COVID-19 first appeared six months ago, the world still held a positive outlook toward the future. But we soon discovered that it had turned into a massive global pandemic and changed the startup fundraising landscape forever.
Hence, VC investing has become a mere shadow of its former self with the economic downturn, . The growing number of uncertain variables has also discouraged VC to keep up with their usual pace.
In spite of this, we’ve heard from VC funds in Singapore announcing their plans to continue supporting businesses with more investment opportunities? Some were confident that early-stage startups and SMEs will be able to secure their own investment regardless of the Covid-19 impact.
Are they just for the sake of capital deployment? Or the chance of getting fundraising is not that worse like you thought it would be? Let’s find out!
The Covid-19 Effect on Startup Investment
According to DealStreetAsia, the number of fundraising deals in the region rose 91% while transactions climbed 59% compared to last year (within the same period of Q2). In other words, the investment in startups, especially commerce and fintech sectors, jumped during the covid due to the rise of work from home and social distancing practices.
It is worth noting that most of the deals are actually made predated Covid 19 and only officially announced recently. Thereby, it shows how the pandemic slows down the deal-making process. Q3 and Q4 periods are expected to reflect the full impact of the outbreak as the number of investment deals goes down toward the end of the year.
On the other hand, venture capital firms and investors in Singapore have now started to become cautious with new investments. Pressured by a weakening economy and an unprecedented crisis, deploying capital has become increasingly stricter. All this leads to startups fighting even harder with new strategies and business models to win their VC approval. Still, fintech and e-commerce startups are more likely to succeed in fundraising compared to others.
At this point, you must be wondering, “So does that mean my startups still have a chance?”
It is worth taking the shot, especially if your metrics are strong. Investors are still looking for any potential startups and making deals whenever possible. But the fund is limited and there is only a handful of cash they can give out so you might not get it even if all conditions are satisfied.
Take the opportunity to network with investors and build up the relationship. Take every rejection with the mindset of collecting insightful feedback to improve your pitch for future deals.
How to Successfully Attract Investors In Singapore During Covid-19
Fundraising activities during the COVID-19 pandemic may not be as hot as last year, but investors are still looking for investment opportunities to grow and diversify their portfolio. Therefore, it is crucial to identify those who are most likely to invest in your startup’s sector. Look into their recent investments such as deal size, funding round, and how they close the deal.
The research will enable you to understand how they will react to new investments and which one is the best suit to financially support your startup. Additionally, knowing exactly what they are looking for will give you the upper hand over your competitors who might be competing on the same deal as you.
Once your research is complete, it is time to re-evaluate the viability of your business model in the current environment. Can it survive the pandemic? Are sustainability and long term growth possible? Does it generate any form of profit right now? If not, then your product/service is most likely going to fail no matter what. Hence, you will need to make some changes to ensure there is an actual demand for your product/service.
Additionally, the outbreak has skewed the customer behavior significantly, which in turn is impacting their spending habits. They are more price-sensitive and prefer only the best value-for-money services/products on the market. So try to align yourself with the customer and mold your business into those that deserve the attention from the market. Only after this, your investor will be willing to consider funding.
The final step is drafting your messaging to the investors. Since only businesses with strong unique selling propositions can get their interest, you have to ensure that the pitch deck reflects the same. In other words, stand out from the crowd and prove your strength or perish.
Fortunately, we are living in a time of uncertainty so you do not need to have extremely high valuations as they can spook the investors. Instead, be realistic with achievable goals to not only gain their trust but also mitigate the dilution risk. Transparency is the key to draw investors, especially during crises.
Take Advantage of Referral Program
VCs can source up to 80% of their deal flow through referrals from their networks and are significantly more likely to invest in referred companies compared to companies found through outbound or cold contacts. Some VCs put an active effort in building and maintaining referral networks with impressive results while others do not even realize they are missing out on the highly relevant referral deal flow.
For example, Tech JDI is a Venture Scout for Saison Capital, helping them to source for investment deal flows. We are also scouting for Yunqi Partners, another great early and middle stage VC fund.
Simply put, we help connect tech startups based in Southeast Asia to secure an initial investment check size between S$200,000 and S$2,000,000 from the investor.
If you are looking for an investor to fund your entrepreneurial journey, please do not hesitate to contact us.
Anytime is a good time to get funding for your startup, especially during the Covid-19. As we mentioned before, the trick is trying to stand out from the crow and secure a pitch meeting with your investors. Moreover, as the funding is limited so do not get discouraged if you fail. Instead, learn from them and be well prepared for the next pitch opportunity.
Alternatively, if your startup is going offshore to Vietnam and build up your own tech team, contact us now for a free detailed consultancy. We have successfully supported startups and SMEs such as ShopBack, Vkey, and more on their offshore journey to Vietnam. There is no doubt that our experience will be a great contribution to help you achieve the same goal.