Sep 23, 2022
Becoming a breakthrough brand
It’s been an eventful couple of years in the business world, just as it has in every walk of life. And from a global venture capital perspective, the post-pandemic future is looking just as fast-paced.
The theme of the last year or so within global VC circles has been recovery. Most forward-thinking organizations invested in human skills and technological tools so they could respond to whatever challenges are on the horizon, and the result was a record number of new unicorns.
But 2022 has seen stagnation in some sectors, and tech in particular, when it comes to venture financing and IPOs.
As a result, many startup founders are finding it harder to get fundraising deals done, as due diligence times have extended and many investors are being much more cautious. However, it certainly isn’t impossible, as long as you can get your planning, pitch and overall approach right.
In this blog, we’ll look at the current market state of play from a startup’s perspective, how best to stand out when looking for investment, and what you need to do to maximize your brand’s chance of becoming a ‘unicorn’.
How you can stand out
The second quarter of 2022 witnessed the first drop in VC funding levels since the start of the pandemic, with funding bets at later stages taking the biggest hit. That means startups courting investment have to work harder than ever before to catch the eye of investors and get deals over the line.
They’re not especially interested in expanding their portfolios by going down tried-and-tested routes or entering markets that are already busy. Instead, they want to get creative and innovate with business ideas and models that set trends rather than follow them. Particular areas of interest include:
- Artificial intelligence: AI is changing the way that goods and services are delivered to customers, helping them get faster, easier and more personalized experiences. The usage economy-based app Tulu is already transforming lives for tenants in smart apartment buildings, delivering on-demand access for thousands of shared household items
- Cyber security: cybercrime has moved far beyond the realm of bedroom hackers. It’s now big business, highly organized, extremely sophisticated and very well-funded. Every business is involved in an ongoing arms race to keep data and applications safe, and startups like Identomat with AI-powered KYC and identity verification are leading the way
- Solving the world’s problems: many VCs want to play a part in making the world a better place, whether addressing issues like climate change, unemployment or mental health, to name just three. In the case of climate change, ZTractor’s world-first autonomous electric tractor is on the way to making farming greener and more efficient, as well as safer and more productive
- Crypto: it’s worth noting that crypto bucked the trend of recent decline in VC investments – the major cryptocurrency exchange FTX alone raised $800million in January 2022. VC investors are still very keen to explore ways to take advantage of virtual currency innovations, such as LendingBlock, a lending and borrowing platform where users can deposit idle crypto funds and earn attractive rates of interest.
Why a good strategy is crucial
This is the part where it’s best to pretend you’re about to pitch to the millionaires on Shark Tank (or if you’re reading this in the UK, Dragons’ Den). Any potential investor is going to have some serious and searching questions about the opportunity you’re presenting to them. And while you might not face the pressure of the TV cameras, you’ll be expected to address any issues that they may perceive.
Having a solid plan and business model in place gives you the foundation to impress VCs, and the best way to start developing it is to ask yourself these five questions first:
- Do you have an innovative idea? Have you developed a breakthrough technology, or a new way of doing business that will shake up a traditional marketplace?
- Is the business opportunity big enough? Can you demonstrate that not only is there enough potential in your idea to make you considerable amounts of money, but there’s enough in it for an investor to profit, too?
- Are you targeting the right audience at the right time? Is there a sizeable, demonstrable target market for your idea, and are they ready for whatever innovation you’re planning to unleash on them?
- What competition is out there? Is anybody pursuing a similar line of thinking, and if so, what makes your idea so much better that it’s the obvious winner in your chosen marketplace?
- Who would be the best investor for your idea? Who has the money, contacts and expertise in your area of innovation, or in your specific industry? And what do you need most: direct financial investment, or a name that can open doors for you?
Answering these questions will give you a clear vision for your enterprise, along with awareness of some of the risks along the way, and a target for who you think will be able to take you to the next level.
At InfinityVC, we’re always on the lookout for ambitious startup projects that can shake up the world of technology. As well as strategic investment, we provide expertise and industry insights that ensure that growth is nurtured in the best possible ways for success. Learn more about us, and explore some of the successful businesses we support, here.