Proptech Pitch Party: Investors reveal what they are looking for in winning startups
Many startups have a great team and idea with potential, but they face the problem of lack of funding for their development. Startup competitions that are becoming increasingly popular may be the solution for them.
Startups will be given the opportunity to present their idea to the jury and get not only financial support, but also contacts, mentoring, or premises for their business. However, many startups do not know what to expect, how to get the most out of participating in the startup competition and how to attract investors.
The first HubHub Proptech Pitch Party had results beyond expectations. Promising startups presented their ideas in three thematic areas – Proptech, Smart City and Green Living. Among the HubHub Proptech Pitch Party mentors and evaluators were large players in the Hungarian startup ecosystem, such as OTP Lab, Hogen Assessment Systems, HB Reavis, Hiventures and PortfoLion Venture Capital Fund Management.
We interviewed investors and startups themselves at the first ever startup competition in our HubHub center in Budapest. The first part of the article presents an investor’s view – that of Hiventures.
Can you give a piece of advice to entrepreneurial people how to evaluate which idea is worth their time? How should they assess their idea, so they don’t waste a lot of time working on bad ones?
Innovation is one of the most important factors a startupper should examine in its own project. If the idea is not scalable and there is no new software, product idea or business model in it, then it’s not for venture capital. When evaluating which idea to go for, the founders should look for answers for questions like ‘Is the problem we are solving big and is it painful for someone?’, ‘Is there a unique value in our product/service?’, ‘Is there anyone who is going to pay for it?’, ‘Can we make an international, scalable business?’, ‘Are we better than the competition?’, Is the market big enough?’ etc. The more yes answers the founder gives, the stronger the idea is. The founding team is also the key of success. Investors are investing in teams with a clear vision, business approach and diverse competencies.
How do you evaluate a startup ecosystem in Hungary? Do you think there are enough opportunities?
As we can see there was a huge development in this sector in the past years. Now we have everything for a successful startup ecosystem: the appropriate infrastructure, incubator and mentor pool and the financing is solved as well. Hiventures helps startups in three life cycles: pre-seed, seed and growth periods and we have a competitive advantage compared to the stakeholders: we are also investing from the very beginning, even in risky ideas.
There were only a few startups in Hungary when we have started our activity 2 years ago. We almost doubled the number of the startups as our unique value proposition offered achievable opportunities for financing their ideas. Currently there are approximately 800 startups and countless interesting ideas in Hungary.
What do you think, when is it OK for a startup to cooperate with investors and when should they be able to earn money for themselves?
Cooperating with an investor is much more than who is paying the bills. Beside money an investor could share learnings, useful contacts and support in difficult situations. If you are starting a business from 0, an experienced companion is a must have. An investor in a startup could be useful from the start, but before you ask money from one of them, you should consider your goals and your current situation.
When do you consider cooperation with a startup? How long does the agreement process usually take? What do you require from a startup you decide to invest in? What are your initial conditions?
Competitive advantage could be a really important factor in consideration. An innovative idea could also be engaging, which can create a market for itself or can be a leader in an existing market. But only an invention is not enough to get the investment, if there is no need for that product or service. The composition of the team is almost as important as the product or service itself. The success is almost guaranteed if the founders and the members of the team are reliable, ambitious and their business goals are achievable. We have several meetings before we decide about the investment, but the length of the process can be different in life cycles. The total investment process could take 3-6 months, but it depends on the stage of the startup and the size of the investment.
From your perspective, what should a startup consider while looking for investors? They are “chasing money”, but probably not all investments are convenient.
A startup who is looking for money should start with a thorough market analysis. When they have arrived at the point, where they need more money, they should know their opportunities, the participants of the market and their goals. If they are having a restaurant chain in mind, they have to think about different investment solutions than a startup, which is developing a new hardware. The investors’ value proposition can also be different from each other: some of them are offering only money, but others can offer their knowledge, contacts, mentor pool beside money. In this case the goals of the startup could help in making a decision.
What is the crucial factor while “pitching” in front of investors? What do you focus on when you want to evaluate a startup quickly?
The first impression is crucial, and they have only a few minutes to convince the investors. There is no time for useless topics, so they have to be simple, structured and understandable. In this few minutes you should convince the investors not only about your professional skills and the value of your product, but about your team structure as well. Show confidence and proficiency in your area and show the person behind your product. These are the most important factors.
There are several opinions about the structure of a great pitch presentation. How do you think it should look like?
Creating a pitch deck is not an easy task to do. You have only a few minutes, few slides and few sentences to convince a person to give you a lot of money. Your job is to grab their attention in the very beginning. Start with a story or a joke, which can be memorable for the investors, then describe your business very simple, only in a few words. Numbers are also the key to success. It can be really convincing for the investors if you can show some numbers and future plans, which portrays the revenue and a five-year growth rate. Team – as we mentioned earlier, the team is also as important as the idea. Show your proficiency and your motivation as well.
When do you think is the right time for startups to start to ask for money or event attend a public event like the one in Hub Hub and present their idea?
There are no limits on when to start asking for money for your startup. If your goals require more money than you have, you can ask for money from the very beginning. You only have to finalize the service or product you offer, the team structure and create a first draft about your business and financial plans. These events are not only good for asking for money, but for networking and collecting information and experience. You can make useful connections and test your product in small as well.
What do you think about the first Hub Hub pitch event for local startups?
This event set high standards in various manners. The facilities of the location, the selection of teams, the quality of digital materials and the management of the event itself were all outstanding. We had the constant feeling that these guys here truly care for what they do.
Which startup caught your attention and why?
All the teams did a great job with elaborately developed pitches based on well-grounded researches. In my opinion Screbo’s pitch was outstanding because of its simplicity and clear focus. They choosed an easy to understand real-life problem and came up with an innovative yet scalable solution.
We have a second perspective from the winning Screbo startup, and the finalist called Heatventors, offering an innovative energy storage solution. Screbo won with its digital control system to create a personalized guest offer based on gender, age, nationality and instant chatbot support. The team won several prizes – participation in the Hiventures investment program, a chance to present their pitch to the HB Reavis expert team, HubHub’s international mentoring program, tickets to Future Now in Bratislava, and a 6-month rental of space in the newly opened HubHub in Budapest. In addition, it also won a special award in the form of exclusive mentoring by OTP Lab experts.
What was your motivation to attend Proptech Pitch Party, and how do you like Hub Hub?
Screebo: First of all we wanted to test the product and see how the audience of Proptech reacts on it. It was an encouraging feedback for us to win both prizes offered by the organizers of the contest. It really inspires us and gives us motivation to keep working hard. HubHub provided us with an amazing environment all day. It was very cool to spend the afternoon in a modern and inspirational venue. If we would need to pick one from the best experiences we had I would say the workshops with the mentors. It was really useful and exciting. After absolving this competition, do you have some advice for other startups how to pitch appropriately or how to network effectively during events like this?
Heatventors: Previously we were attending in the OTP Lab incubator and they connected us with Hub Hub. Our motivation was to win an office space and to make partnership with HubHub and HB Reavis because our product fits to their profile.
After absolving this competition, do you have some advice for other startups how to pitch appropriately or how to network effectively during events like this?
Screebo: Always be very clear and essential in communication. We should always keep focusing on the problem and the solution provided by our product. In terms of the networking phase of the event I recommend everyone to be bold and proactive! Bring your business cards and always be prepared for networking. This part is almost as much important as the pitch itself. Networking is where we can take the opportunity to talk about what we do.
Heatventors: Our advice to the pitch is to make the message clear and highlight why you are here and what is your goal whit this pitch opportunity. Before the networking event you should check the list of the participants if it is possible, to know who is important to you and don’t leave your business cards at home.
If you want to get inspired and get closer to the startup environment, follow what is happening at HubHub. And if you already have your startup running, don’t forget to take your business cards with you for the next event!
Article in cooperation with Daily Upgrade.