September 6, 2012 by Isaac Timothy T
Product innovation is one of the main issues on which investors are focusing when deciding whether to finance a project, says Jimmy Jia, Associate at Mercatus Capital, a Singapore based business incubator. A profitable idea needs to be scalable. The size of the markets to be captured by the idea is also among the important issues taken into account by investors.
Defensibility of a business – such as intellectual property, copyrights, trademarks are also taken into consideration when they evaluate a business idea at Marcus Capital, shares Mr. Jia.
From the investors` point of view, the experience and execution capability of the team is also essential. If the team is young and it is looking for funding for the first time, then strong enthusiasm and realistic expectations are a must, too.
Young entrepreneurs who look for funding must be prepared to answer the question, why customers would buy the product? A structured and reasonable answer is halfway to success to get funding, as it demonstrates a well-defined market and clear strategy, reveals Mr. Jia.
Earlier this year Mr. Jia was invited to speak at the Generating Ideas event in Jakarta, which is one of the promotional events of the Asia-wide Pitch It! competition for young creative entrepreneurs. He had the chance to interact with some bright and talented young entrepreneurs and noticed a common mistake made by them: underestimating the importance of a clearly defined target client, and as a result creating a one-size-fits-all product. The problem with this approach is that the entrepreneur starts focusing on too many targets and loses focus of the core business, according to Mr. Jia.
Other factors taken into consideration during the investment pitch are: understanding the competition globally; having realistic expectations about how fast the company can succeed, and how much the company is worth.
Getting funding for a start-up business is not an easy process, though there are some key steps which investors follow when deciding whether to incubate it. Mr. Jia shared some insights on this topic:
- Understanding the real picture of the business, identifying the market potential, competition and the product value proposition;
- Building the core strength of the business and putting up the right corporate structure, business model, revenue mode and promotional plans;
- Breaking down the tasks to the operations level, tying up the action plan with resources and people involved;
- Preparing a financial plan for budgeting and fundraising.
Pitching for funding is a complex process that requires good planning, clear and realistic vision about the execution process of the business idea. However this cannot be achieved if the entrepreneur is not passionate. Investors are looking for people with sparkle in their eyes who are ambitious and driven. Thus, the first successful step to find funding is to believe strongly in the idea that you want to sell, says Mr. Jia.
Jimmy Jia is an Associate at Mercatus Capital. As a generalist, he is actively involved in various sectors with keen interest in Healthcare, Interactive Digital Media, and Creative Products. He is also part of the mentorship team under the Spring Incubator program. Prior to Mercatus, he worked at Dulwich College Management International as a finance analyst in Shanghai where he focused on new business development and financing. Jimmy graduated from the University of Wisconsin, Madison with a B.B.A in Finance, Investment and Banking. He is a Singapore Government Scholar and fluent both in Mandarin and English.
Written by Sandra Peev
About Pitch It!:
It is a platform to uncover the best idea(s) in Asia’s creative industry for funding. Pitch It! looks for ideas or concepts which have yet to be realised/concept stage/in prototype or early development stage, and have the potential to be further developed.
About Asia on the Edge:
Asia on the Edge is a regional platform aggregating creative entrepreneurs and arts practitioners with the aim of incubating new ideas and trends of Asia and Asian origins. AOTE 2012 will gather 300 creative entrepreneurs from Singapore and Asia for a 3-day conference in Singapore from 7th to 9th September.
Sandra is a marketing specialist with experience in starting up business in Europe. She was part of a start up team for a management consulting company in Europe, where she gained a first-hand experience on building a business from scratch. Before moving to Singapore at the beginning of 2012, Sandra also worked as a Project Manager at one of the leading and fastest growing communication agencies in Central and Eastern Europe. She is a passionate traveler and relishes exploring exotic destinations. Sandra is a travel correspondent for the US based Reach the World Foundation and blogger for INSEAD Business School.