Episode transcript:

M.K.:
Alper, you’ve mentioned to me that there are six criteria that a potential investor looks for in an investor presentation. Tell me tell me more about this. What are the six criteria?

A.R.:
Well, I wasn’t aware of these six criteria before meeting my mentor here. And so so this is what he talks about in in his YouTube videos and this is his content. And he has much more amazing ideas on everything about startups. So as a side note, I would recommend if there is if there are founders in our audience, they should check him out and we will include a link in the show notes.

A.R.:
Yeah, go to his website and to the videos.

M.K.:
Okay.

A.R.:
I really like listening to him when he talks about these six criteria, which is basically what investors look for when when considering to invest in a in a startup project. Okay. Because you know, new newsletter projects that are more six fresh and dime a dozen. So you come across them every day You can for example, nowadays you cannot walk around on the streets or on the Internet before someone tries to pitch an idea and and and ask for an investment.

A.R.:
But the reason these criterias exist is to be able to differentiate the good bunch very quickly from the from the rest of them. Because because a, I like how he talks about what’s the scarce resource for a startup.

M.K.:
It’s money. Yeah.

A.R.:
So they have the idea. They have maybe some some some progress in their projects, but they need the money. They need more money, they need the, the cash to be able to continue with the project. Well, what is a scarce resource for an investor is time. So in that regard, I mean, for that reason, an investor has to be able to select very quickly or eliminate very quickly when he or she is looking at a startup project and say, okay, this is worth digging deeper or not, this is not worth spending my spending more time exploring it.

M.K.:
Let me make sure.

A.R.:
That I see that’s the reason behind these six criteria.

M.K.:
Are so. So let me make sure that I’m following you correctly. So if I’m an entrepreneur and I’m putting together a pitch deck, I’m going to go meet with a potential investor and I’m putting together a pitch. So these are the six criteria here that I should probably be including in my pitch deck. Is that correct?

A.R.:
I want to say you should probably be including that. I would say you should definitely be including them and not talk about a lot more stuff, at least in this first meeting, because it’s going to be a short presentation. So those I would consider that those are the six must haves in the presentation and not much else, at least in the first first meetings.

M.K.:
So this these six criteria. So you say that they’re must have they’re not just things that I if I’m an entrepreneur, they’re not just things that I should probably have in my pitch deck. They’re things that I really must have in my pitch.

A.R.:
They should have.

M.K.:
I should definitely have. What are those six things?

A.R.:
Well, I’m just going to count them and then we can decide how much time it was required to get to to go deeper on them. So the first one is the market. The the second one is the value proposition that you’re making with the project. The third one is timing. Timing of the project. The fifth is team who is who is running the project.

A.R.:
The sixth one is scalability and the no, the fifth one is scalability and the sixth one is exit exiting from the investment. Okay, so these are the criterias that I would be looking for as an investor when evaluating a startup project.

M.K.:
Okay. And so if we have about seven or 8 minutes left on the podcast, so how many would you like to go on to today?

A.R.:
Well, I could speak about them from anywhere between 30 seconds and 30 minutes or so.

M.K.:
Sure.

A.R.:
So let’s just start let’s just start with the first one and and and see how it goes.

M.K.:
Okay. And the first one remind me, I think the first one was market, right?

A.R.:
Was the market. Yeah. Yeah.

M.K.:
So. So tell me what’s typically goes like, where should we start? What typically goes on a marketing slide?

A.R.:
Well, I’ll tell you what typically goes currently on a marketing slide. It’s not that I’m not saying that it should, but it’s is the case. Usually you see these this is three circles inside each other, one large circle addressing the total addressable market and then a smaller one saying the target market and then a smaller one saying, I don’t remember the term right now, but it’s something like the idea is that the market is huge and if we just can get like 0.005% of this market, it’s going to be a massive business and we’re going to make a lot of money.

A.R.:
Okay. But I mean, just because you ask what typically goes, I am giving that example. I’m not saying that that’s what should go on the on the slide because.

M.K.:
Okay.

A.R.:
I mean, everybody’s claiming every startup product claims that they are addressing a huge market and there are millions, if not billions of potential customers out there. A But there’s a there’s a huge difference between, first of all, it’s a very easy resource. You can just Google like the number of cell phone users in the world. And I’ll tell you that while our target market is 4.3 billion people or something like that.

A.R.:
Oh, but the problem is there is a huge difference between claiming a big market and actually participating and getting clients from that big market. So it’s not only enough that you have a huge market ahead of you that you should you should also be able to get customers from that market. So that has to be accessible. And this is also related to the to the other criteria.

A.R.:
But what I what I what I would want to see, for example, on the slide for the markets, yes, of course, it’s attractive to see that you have a huge number of people who can be your potential clients. But I would what I would also want to see how we are going to get there first. Clients before you get to the second one and then the third one, and eventually selling to 100 people and then a thousand and then a hundred thousand people maybe.

A.R.:
Okay, So rather than a top down approach where you say, well, the the total number is 4 billion and we’re aiming for less than 1%. So that makes what like 40,000 people? I would I would say, you know, start from the first customers. So what what you’re going to do to get to get him or her, what are the strategies you’re going to put into place so that you will have your first paying customer and then and then go from there?

A.R.:
This will this will give me a lot of confidence in your message and a lot of credibility to you when you show that not only you have a big market, but this also is also a accessible.

M.K.:
So this sounds like a couple slides to me. Is that so you would need because if you’re going to describe your start ing target market, what your first customer might look like, you’re going in if you’re trying to do that with without, you know, filling up the slide with 9 million words, you’re going to need a couple of slides to do that.

M.K.:
So whereas the first slide, you know, you basically just on the first slide or in the in the the old style, you basically just got three concentric circles. You know, you’re the size of the market and then two other circles. You can do that on one side. But what you’re describing here would be on multiple slides. And is that cool or is that going to make the investor angry?

A.R.:
No, I think it’s it’s pretty cool, actually. I mean, it is so common to see concentric circles, so I advise against using them. But it’s important to show the size of the market eventually in the future. But maybe what’s more important at the moment is walk me through the life of your first customers and how your company or project is going to interact with them.

A.R.:
Like what? What expenses are you going to have to make to get your first customer? What is the cost of acquisition of the the subsequent customers that you will have? And I think in the second I think in the first slide, you could show some numbers about the size of the market, but again, not just some Google copy paste like huge numbers from the Internet, but a well researched and justified numbers to show that there is there is a big potential ahead of you.

A.R.:
But maybe on the second slide, show me step by step from this moment on what you’re going to do, especially with my money since since you’re looking for investment, because probably you will use part of that investment to get your first customer. So show me step by step what you’re going to do and what the upcoming steps are going to look like.

A.R.:
And for that, you could definitely use and I and I and I highly suggest you use a second slide to show that process, to show the journey of the first customer entering into your company.

M.K.:
Okay. And so that’s the first criteria of market. And we don’t have time today for for all six, but let’s at least do this. So so what’s what’s what’s the second principle that we really need in there that we must have in there?

A.R.:
Well, the second one is the value proposition, what your project is bringing onto the table as in terms of value from the eyes of the customer. And in this regards that, you also talked about how there is a misconception between what a value proposition is and what a competitive advantage is. Because typically you see in a in a pitch, think a slide about value proposition and there are phrases like, well, we are bringing value because we have this advantage.

A.R.:
We are the first to enter the markets. Our technology is patented or, you know, something, something regarding competitive advantage. But the problem here is in the beginning you actually don’t have any competitive advantage, even if you have a patented product, even if you have even if you are the first entrant to the market, these are not things that are going to give you sustainable advantages in the long term.

A.R.:
The technology can be copied. The there could be second, third or fourth entrance into the market. So it’s important to distinguish between differentiate between what a value proposition is and what a competitive advantage is. And in this regard, I want to see the value proposition. So it may have to do with and not may, but it should have to do with, again, the first customer that we talked about.

A.R.:
Basically, it’s the developer proposition answers the question why should the customer, why should a new customer buy your product or services compared to the other providers on the market? Why should they come to you and, you know, product features or design or nice things about nice factors, about your product or service There most of the time, not enough for other people to to change their, you know, current company of a product or a service and come to you.

A.R.:
You need to be able to provide an economic advantage which may which doesn’t necessarily mean that you should be cheaper. I mean, of course it would be it would be favorable in that regard. It’s not the only criteria, but at the end of the day, I think it would be safe to say you need to be able to offer a value which is which is different than just saying, well, our product is better, our product is is nicer or more attractive.

A.R.:
So you need to be able to show and and economical benefits. And that’s actually what I would want to see in the presentation. So an honest self evaluation of where you’re standing in terms of the competition. And by the way, you said among the six criteria, but we can also talk about competition because there is a it’s pretty important to show that as well.

A.R.:
The competitive landscape.

M.K.:
Equally my.

A.R.:
Presentation at the end of the day, I would want to see. Yeah, go ahead.

M.K.:
So I just want to interrupt and go back to to marketing four or to market for a second, because I was thinking about what you said about market and trying to tie it back to some of the other things that we’ve we’ve talked about in this podcast. And one thing that struck me was that an entrepreneur who is putting together these concentric circles, one of the things that we talked about in this podcast is the importance of knowing your audience and that your audience might not be thinking about things in the same way that you are.

M.K.:
And it’s really important to have it in order to have a good presentation. It’s really important that you learn how your audience thinks about stuff. And if I’m an entrepreneur, I’m going to be with these concentric circles, I’m going to be loud and I’m going to be star struck by thinking, Wow, you know, this market has like 9 billion potential dollars and and 60 million people or 60 or 7 billion people.

M.K.:
And, you know, all I need is a tiny microscopic slice of that. And I’m going to be rich. I’m going to be flying around on a private airplane and all this and eating caviar and all that stuff. And an investor doesn’t care about that at all. It also, if I’m a if I’m at a party and I’m talking to someone at the party, you know, I’m standing over the punchbowl of the party and I’m talking to somebody about my startup and I and I tell them about the potential market size and the market Potential market size, Yeah.

M.K.:
There’s so much money involved and so many people. There can be one or two. But the investor that I’m meeting with isn’t going to be interested in that at all is the investor that I am meeting with is going to want to know how are you going to get the first person and then the second person Exactly in person.

A.R.:
Exactly.

M.K.:
And if and that as an entrepreneur who is wowed by these concentric circles, that doesn’t impress me at all. And if I am talking to somebody over the punchbowl at a party and I tell them how I’m going to get my first customer, they’re not going to be interested or impressed at all. So the things that are relevant to me are completely relevant to it, completely irrelevant to the people that I am talking to and to the people who I need to get.

A.R.:
That’s good.

M.K.:
Yeah, yeah, yeah. So, so we’re about out of time for today, but I totally want to hear about the seed. So today we kind of covered two of the six, right? So we have about one on the left. Okay, so I’m totally looking forward to the next couple of episodes, and I want to definitely hear more about these other principles that we haven’t touched on today.

A.R.:
Okay. Look, like I said, this is my interpretation of material occurrence knowledge. And like I said, we’ll include the link. So if the listeners one wants to go directly to the source, they are more than welcome to do that. And I also highly encourage them to to follow as well because there’s a there’s an immense wealth of knowledge going on.

M.K.:
Yeah, I’ve, I’ve had the pleasure of, of meeting Matthew myself and it’s amazing just to hear him talk. So I highly recommend that. Yeah, check out these links. So it was a great pleasure Alper and thank you very much. I’ll talk to you next week.

A.R.:
You too. Great talking to you. Take care.

M.K.:
Bye bye.