Survival is the Prerequisite to Success
+ Things to Look Out For When You're Fundraising, Demo Day Wrap Up, Applications for W23 Are Open
Survival is the Prerequisite to Success
“In a worsening macro environment, it's hard to raise big money unless you have significant traction. Sales cycles will be elongated, and you might have to orient your business plan to be more frugal. The key is to make it last longer to get to that next step.” - Shiyan Koh, The Hustle Fund
To kickstart season 2 of the Iterative podcast, we spoke about the topic everybody is talking about: the economic downturn. We asked Shiyan Koh, the Managing Partner of the Hustle Fund, and Hsu Ken Ooi, Managing Partner of Iterative, to give their take on how founders in Southeast Asia should tackle fundraising in this current climate.
The key takeaways:
Temper expectations - Funds are still being (and have been) raised, but investors are being more selective in who they invest in. This impacts two key things: speed and valuations.
Speed: Founders can also expect to see slower processes because there's less FOMO than before. Without the sense of urgency, it's now taking longer to book meetings, replies are taking longer than usual, etc.
Valuations: "The name of the game here is 'don't die',” says Hsu Ken. “If you have to take a flat round, or even a down round, that's infinitely better than dying six months from now. Don't hold on to some valuation that somebody was interested in three months ago.”
Flight to quality matters - Before, you could raise based on a good story alone; now, investors care more about revenue. When pitching your startup, there should be a balance of a good story ("this is a big opportunity") and a line of sight to revenue ("here is my sound strategy to get there").
Be more organised - Being organised is the fastest way to build momentum, but it's easy to lose it if everything is out of place. “You don't want to lose momentum for things that are internally within your control,” says Hsu Ken.
To listen to the full podcast, go here.
Ideas from Iterative
Things to Look Out For When You're Fundraising
If you do a quick Google search, you can find loads of things investors should think about before investing in a founder… but not so much for the other side of the table. We want to change this.
Founders who are new to fundraising don't have a playbook on fundraising - like what term sheet is right for them, how to carry out DD, what good value add looks like - and because they're new to this, some don't even realise they signed the short end of the stick.
So we invited Brian Ma from Iterative, as well as Nikhil Kapur from STRIVE to share more about the common things founders need to look out for when fundraising. In this episode, they talk about…
What founders should be asking investors
Horror stories on investors from Nikhil and Brian
When should convertible notes come in?
How founders can navigate through the current funding cycle
The green flags from investors - what good investors look like
Listen to the full podcast here.
Ideas from Others
Daniel Shi on Why TAM Isn't the Best Framework For Expansion
We're excited to feature Daniel Shi (again!) as a guest writer in today's newsletter - Daniel Shi is an angel investor. Previously, he spent six years as an operator at Remitly, an international payments company, from early stage until IPO. He's also worked at Tencent and Amex Ventures, investing in gaming, e-commerce, and Fintech.
Previously, he wrote an article on S-curves framework - and how startups should reframe their growth mindset. He's since written a follow-up article to expand on opportunity sizing.
“The largest TAM markets oftentimes have the lowest ROI because they are some of the hardest to enter, grow, and make a profit.”
Daniel Shi: Startups commonly make a mistake by prioritising the largest markets for entry and expansion. Yes, big TAM markets represent a large opportunity, but they can also be highly competitive, slow to change, and highly regulated.
As an international expansion operator, I encountered this issue time and time again. The markets we thought were too small would yield great results, while we struggled in big markets. Over time, my experience sharpened into a framework for opportunity sizing, which I've detailed in my latest article.
Spotlight on Founders
Batch S22 Has Graduated
Demo day was last Friday, which means batch S22 has officially graduated! To the investors who attended, thank you for coming.
We're immensely proud of the founders who worked hard to prepare for demo day. We've worked with them for the past 12 weeks, and we can't wait to see their startups’ growth.
To the founders, thank you for being part of Iterative - and congratulations again!
Congratulations, Team Shipmates!
Congratulations Josh Supan, David Marquez and team Shipmates on their US$2.2 million raise! Shipmates was part of our S21 batch, and we're stoked to have been a part of their early journey.
In the Loop
Applications Are Open
Batch S22 has officially graduated, which means we're a step closer to the next batch. Applications have already opened, and we've received 100+ applications (and counting!) thus far. If you're a founder and you're working on something, we'd love for you to apply.
Iterative invests up to $500K, and upon admission, we invest the full amount upfront and work with the founders closely for three months. Apply to Iterative's W23 batch here.
Work with Iterative
We're on the look out for people who want to join us on our mission to increase the GDP of Southeast Asia.
Talent Partner: Someone who knows what it takes to run efficient sourcing and vetting processes to help us grow in headcount this year.
Investor Relations Manager: This role will shepherd potential LPs through our fundraise process, communicate with them on our vision, strategy, and results, and secure capital for our next few funds.
Head of People: We need a scrappy, organised, and ambitious HR generalist who can also put in practice our initial recruiting processes and needs.
Content Associate: This role will help the Content Lead to produce a library of content and tools for current and future Iterative founders.
If you're interested, or know someone who's a great fit, head over to this link here.