Startups Need To Identify Their Painkiller Product
In recent weeks, international VCs have put out warnings for startup founders in light of turbulent economic times. Closer to home, inflation and disruption in food supplies are among the signs of a troubled economy.
We speak to Renuka Sena, co-founder and chief executive officer of Proficeo Consultants on the areas startups need to be on the lookout for and what a troubled economy could mean to founders nationwide.
Q&A with Renuka Sena
Should founders be more wary of the signs of a shaky economy?
Yes - Any entrepreneur worth his salt should be aware of factors that will affect their business. Founders should always keep abreast of the environment in which they operate, the markets and customers that they serve and external factors that impact business.
Large companies do this with Scenario Planning, Disaster Recovery Protocols and Risk Management and Mitigation strategies. Whilst its not necessary for startups to take these types of measures, they should at a minimum be aware and have thought about short and long term measures to combat factors that will affect their business.
What advice do you have for young founders?
Necessity is the mother of invention, so they say. Problems that arise need solutions. Look around you and find a problem that needs solving but ensure that your solution is a “painkiller”.
One of Proficeo’s most illustrious alumni is Juristech. They began in 1997 during the Asian Financial Crisis offering data mining and analytical tools to help banks generate more sales. However, in view of the financial crisis, this was not the “painkiller” that the banks (their target customer) wanted because of the rising bad debt situation. What did they do?
They pivoted and instead offered debt recovery, credit management and litigation software. That became their niche and their growth path to becoming market leader and were subsequently acquired by CTOS Digital earlier this year for RM205.8M (please fact check this).
What advice do you have for founders who are currently looking at advanced stages of fundraising?
Ultimately I think investors just want to see that entrepreneurs are prepared - not just for fundraising but to actually execute the plans presented and achieve the growth rates promised. When I say prepared - I mean, have thought about it, done their research and have a practical plan that they can defend.
Many entrepreneurs cannot clearly articulate their Go-To-Market Strategy - and this is especially important for entrepreneurs who are looking to raise larger cheques. So they need to do sufficient research on their target market and market potential in the current climate. This will help them prepare for questions investors may ask regarding the economic climate and how they can respond to assuage investors regarding investment risks.
They need to be prepared to “kiss a lot of frogs before they find their prince”. Many entrepreneurs get discouraged when they are turned down. They need to understand that it's not personal. Investors are fund managers and need to provide returns. Not all investors are the same so don’t paint them using the same brush. They need to understand the investors and their portfolio and risk appetite. Its not uncommon to hear that entrepreneurs have pitched to more than 50 Investors before they find the right one.
Start fundraising before you need the money. Many entrepreneurs start too late and underestimate the time needed to successfully raise.
What are some of the challenges would founders most likely face this year?
Reduced spending. Consumers and businesses will think more than twice about spending in this climate. And that brings me back to the Juristech story - if you have a “painkiller” product, you will weather the storm. Think about this and don’t be afraid to pivot - just make sure that when you do, you know the market needs and are clearly providing a solution.
Are there any efforts from your end to help founders brace through these difficult times?
Proficeo now conducts programs around Impact and Sustainability. We have a new brand for this called MIDAS - Multiply Impact and Drive Action Sustainably and have conducted several pilot programs. The Capital Markets and Institutional Investors look into Sustainability and ESG as a key factor when making investments. More and more VCs are also looking into this area applying “Sustainability Lenses” to their investments. Startups should start thinking about this too.
If they are interested they can go to www.proficeo.com and register. We will inform them of up-coming programs.
What more can the government do or should they step in to provide more assistance to the startup ecosystem?
The Malaysian Government has done and continues to do a lot for our entrepreneurs. Many initiatives have really helped the ecosystem. However, there are also a lot of silo-ed approaches that should be better streamlined and which I believe are being looked into.
Proficeo has worked with key agencies like Cradle Fund, MDEC and MaGIC (now MRANTI) and we are very grateful for the opportunities provided by the Government to design and conduct a multitude of programs. We recently published our experiences in our 10 Year Impact Report. There are a host of recommendations that we have included in the report. Please note however, that the content of the report merely serves to share our experience over the past Decade of conducting these programs for the agencies and working with entrepreneurs. Having conducted programs across industries and segments, we wanted to share what we observed/ learnt.
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Events
The Carsome Mobility Lab is now open for applications! Co-organized by Carsome and Sunway iLabs, the Carsome Mobility Lab is a 4-month accelerator that focuses on funding, supporting and scaling startups that are disrupting the auto ecosystem.
Applications close on the 4th of July 2022.
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