How To Be A Startup That Stands Out: Insights From the Front Lines Of Startup Competitions
As a committed partner in the Global Entrepreneurship Network, Microsoft 4Afrika works closely with various SME organisations to enable and empower start-ups and SMEs across Africa. This year, Microsoft will be sponsoring the 2017 Global Entrepreneurship Congress, taking place for the first time on African soil.
Microsoft also recently sponsored the DEMO Africa and Seedstars Africa start-up competitions, where they provided mentorship to participants on using technology to transform their businesses and attract investors. Djiba Diallo, Startup Engagement Lead at Microsoft 4Afrika, shares her thoughts on how start-ups can develop winning business pitches that stand out at competitions.
According to the GEM Global Report, more than 100 million businesses are launched around the world annually. That’s just over three businesses every second. Every year, hundreds of these businesses stand bravely before investors at startup competitions, hoping to secure funding and get noticed. This year, 723 startups applied for DEMO Africa, 30 pitched and only five won.
Microsoft 4Afrika was a sponsor of the DEMO Africa and Seedstars Africa competitions this year, which gave me the opportunity to watch these startups in action. It got me thinking about the best, and worst ways, to go about a competition pitch.
What is it that makes the winners stand out from the rest?
- They plot their time – ruthlessly
“In pitches, I evaluate 80% team and 20% idea,” says Hanan Abdel Meguid, CEO of Angel Fund, Kamelizer. There is no point rushing a pitch, because often your impression as a person is what counts the most.
At DEMO Africa, candidates have six minutes to pitch. At Seedstars World, they have five, followed by another five minute live Q&A. It is difficult to cram often what is your life’s work and passion into such a short space of time. Evaluate your audience and pick the key selling points or differentiators of your solution. Then, focus on how you deliver these. Be concise. Be confident. And prepare, prepare, prepare. Investors love a capable candidate.
- They follow this rule: CSI
Challenge. Solution. Impact. CSI is a great formula for a winning pitch. Even better than just stating ‘challenge’, ‘solution’ and ‘impact’ is to weave them together in a story.
I once came across an agricultural startup who developed a mobile solution to help prevent cattle theft. When opening with the challenge, he explained how he knew a farmer who loved his cattle so much, he let the calves sleep in his bed. He then linked it to how 70% of his community rely on agriculture for income, so when cattle are stolen, it not only affects them personally, but is detrimental to their livelihoods.
The result? An endearing – and effective – story.
I also loved the pitch from one of the winners of DEMO Africa 2016, Strauss Energy. They used CSI excellently:
- The challenge: In sub-Saharan Africa, electricity is expensive and often inaccessible, leaving many school children unable to study after hours.
- The solution: Strauss Energy sells electricity to homeowners at 75% cheaper than the national grid, by manufacturing solar roofing tiles.
- The impact: Out of the 150,000 houses built in Kenya annually, Strauss is already working on 1,000 houses – with an additional 10,000 houses in 2017 (targeting a 30% market share).
The solution and impact show investors the opportunity to scale and an understanding of the market. It also plays on a little emotion by tying in a story about children. In addition, solutions in the education, healthcare, employment, finance and commerce, and energy sectors are attractive to investors, because they have a large market base.
Always remember: Your innovation doesn’t have to be new. It just has to be better, faster and more accessible. Think Uber, when public transport has been around forever.
- They prepare for the worst – and face it bravely
The live Q&A session that follows the pitch is often the most difficult part. There is no way of knowing what investors will ask and they can be ruthless; not because your solution is weak, but because they want to test you.
Even though it’s a live Q&A, prepare answers for any possible question. At the same time, approach the session with humility, understanding that your answers or viewpoints may not always be right. Nothing is more off-putting to an experienced investor than arrogance and excessive defensiveness. There is a fine line between confidence in your product and an unwillingness to get an outside perspective.
The good news is that some startup competitions start with two-day mentoring sessions or bootcamps. This gives you a chance to gather some outside feedback beforehand and some extra training ahead of your pitch.
- They know the journey only begins now
Remember, if you win a startup competition, the work is just starting. Beware of getting complacent or like you have "made it." The hardest work is still to come, where you need to deliver on your promises.
If you don’t come away with any prize money, the greatest value is experience. Experience is priceless. You can be sure that, many times, winning startups went through other competitions and pitches without any success. However, they understood that each experience helped them get better at pitching and boosted their confidence on stage. They kept working to develop their solutions.
Finally, don’t only rely on competitions for funding. Look elsewhere and explore your options. As Harry Hare, CEO and Executive Producer of DEMO Africa, says: “The best source of startup funding, in my opinion, is a paying customer."