PETALING JAYA: Raising capital is a pivotal milestone for any startup, but securing investment requires more than a compelling idea – it demands a nuanced understanding of what investors are looking for.
Experts, corporate advisers, wealth managers, seasoned entrepreneurs and private investors share insights on the critical elements investors prioritise and how founders can effectively highlight these during fundraising pitches.
“Arguably one of the most challenging facets of scaling a business is cash flow and that requires funding,” said Asia Farms Network Sdn Bhd managing director Dr Tan I-Lene.
“When we started our crowdfunding exercise with LEET Capital, we spent quite a lot of time asking our investors for advice on what areas we should focus on” she added. “The most vital is that you’re able to demonstrate real revenue and threefold growth was just the conversation starter in our case.”
FMGC corporate adviser Ng Wai Lun emphasised the importance of founders demonstrating “a deep, grounded understanding of the industry”.
He advised against relying on textbook answers, urging founders to showcase insights rooted in real-world experience. “The founders need to demonstrate real, on-the-ground knowledge, not just generic knowledge. Avoid textbook answers and showcase insights based on actual fieldwork or experiences.”
This not only builds credibility but also reassures investors that the team can navigate industry complexities.
Investors are drawn to solutions that address real, relatable challenges.
Ng said, “The relevance and relatability of the problem is critical. It should be something that resonates with me, not just some esoteric challenge.”
Founders must convey both emotional conviction and intellectual understanding, demonstrating that they are personally invested in solving the problem, he added.
Further, market size and potential economic impact are also key factors in investment decisions.
Ng and other investors agree that the problem must be substantial enough to have a significant financial impact and scale.
Wealth manager Alan Tay said clarity in scaling and differentiation are essential. “The founder should provide clear, practical examples of how they intend to scale and differentiate themselves in the market.”
The solution should align with growing and sustainable market demand.
Seasoned entrepreneur Aldwin Tay values founders who can demonstrate innovation and resilience. “I want to know that the team can pivot when needed, adapt, and drive meaningful change.”
Investors look for teams that are not only capable of executing their vision but also flexible enough to respond to market shifts and challenges.
Public equities fund manager Kelvin Goh emphasises the importance of a clear vision and an effective execution plan.
“The clarity of the founders’ vision, how they intend to achieve it, and the potential of their products. The market for the product has to be growing.”
Founders should articulate not only what they want to achieve but also how they plan to get there, backed by a robust understanding of the market.
Venture capital private investor Dr Michael Gan outlined several key criteria: “The problem or gap that the startup is solving is (or will be) a big enough problem where there would be a compelling demand to adopt the proposed solution.
“The proposed solution should be better and cheaper than what customers have, and also compared to what’s available in the market.”
He stressed the importance of validated demand, barriers to entry, a knowledgeable and committed team, and sound economics.
“Demand for product should be validated or market traction. There should be some barrier to entry. The team should be knowledgeable and experienced enough to grow the business, and also committed to the business. Economics should make sense – assumptions, projections and valuation,” Gan said.
Even within the same industry, some startups secure funding while others struggle.
“Clarity of vision, authenticity, and a compelling story make all the difference. Tangible proof –such as a prototype or proof of concept – goes a long way too,” Ng said, adding that founders must clearly articulate their mission and demonstrate real progress.
“Startups that provide a clear and actionable roadmap and show traction or proof of concept tend to stand out,” Alan said, adding that investors want to see evidence of execution and a growth plan.
Aldwin said resourcefulness and passion are highly valued.
“It’s the tangible evidence – how much you’ve accomplished with limited resources. Authenticity matters – founders need to connect and convey a deep belief in what they’re building,” he said.
Gan said a strong, balanced team and a defensible business model are essential.
“Mainly the founding team. The team should have a good mix, be knowledgeable and have strong industry connections. Build some traction before seeking external funding. There should be a compelling competitive advantage, and the business model must be realistic.”
Goh opined that resilience and persistence are crucial for overcoming challenges. “Clarity, grit, won’t accept no for an answer,” he said.
Experts also agree that in today’s competitive startup landscape, a strong fundraising pitch is often the difference between securing investment and being overlooked.
While facts and figures are essential, investors consistently emphasise the importance of storytelling as the cornerstone of a compelling pitch.
Ng pointed out that a well-crafted story not only captures attention but also makes your startup memorable.
He said it helps investors understand the problem, feel its urgency and see solutions as both innovative and necessary.
“Storytelling is central. In a pitch, you need to first establish a connection by framing the problem in a way that feels familiar to the investor. Then, hit them with a fresh, unique perspective that sets your solution apart. The market potential and your competitive advantage should be clear, but the first three minutes must be engaging enough to hook the investor,” he said.
Alan said founders who share their connection to the problem build trust and emotional engagement. Investors are more likely to back founders who demonstrate genuine passion and a clear sense of purpose.
“A great story should be relatable and make the problem seem personal. As an investor, I want to see how the founders’ journey aligns with the problem they’re solving.
“If I feel their passion, I’m more likely to invest. Don’t just focus on the product – focus on why it matters to people,” he said.
Alan also said that a unique viewpoint or personal insight can set a pitch apart from the dozens of other investors who hear. It signals authenticity and deep understanding, both of which are highly valued.
“The best pitches I’ve seen are the ones that blend personal experience with innovation. Founders should focus on the emotional connection to the problem, show a strong sense of purpose, and then highlight how their solution is the best way forward,“ he added.
These experts opined that for startups seeking investment, alignment between founders and investors is just as critical as a compelling product or strong traction.
Successful fundraising hinges on chemistry – investors must share the founders’ vision, values and long-term goals, and founders should be transparent and open during discussions.
This alignment is reinforced by pitching to investors who understand the sector, can offer strategic support and whose expectations match the startup’s growth trajectory.
By approaching a diverse set of investors, founders can identify partners who not only provide capital but also bring valuable experience and networks to the table.
Founders must also strike a balance between inspiration and credibility, blending a clear vision for the future with concrete, data-driven results.
Investors want to believe in a bold roadmap, but equally need evidence of execution, such as customer growth, retention, and milestone achievements, to validate that the vision is achievable.
Demonstrating resilience through stories of past pivots, lean operations, and contingency planning further builds investor confidence, especially as markets and economic conditions shift.
The common solution for startups is to focus on building authentic, trust-based relationships with the right investors, while ensuring every pitch is grounded in both a compelling narrative and robust data.
Experts say founders should emphasise shared vision, transparency, and realistic projections, while showcasing their team’s ability to execute and adapt. This approach not only increases the chances of closing a funding round but also lays the foundation for a long-term, mutually beneficial partnership.
