HOW DO I MAKE AN INVESTMENT

DECISION?

Self Introduction

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Goal

• Hajime Hotta • President of Cinnamon • Founder of Innovatube (Incubator) • Ph.D Computer Science (Artificial Intelligence) • Experienced serial entrepreneur in Japan • Invested in total 10 Southeast Asian startups

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My Activity

LIFE OF STARTUPExecution is everything

Find PMF first (Product Market Fit)

Documentation is a waste of time

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My Activity

US Guys say Because but in SEA

Execution is everything

Mentors are excellent enough

for ideas

Too many hopeless ideas

Find PMF first (Product Market Fit)

Hypothesis are too unique to believe

many guys try to verify something

just obvious

Documentation is a waste of time

US guys are very well trained on presentation

too many unacceptable documents

Circumstances are different from US

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My Activity

SME and IDE is quite different tooSTEADILY

PROFITABLE SME

EXPONENTIALLY GROWING

IDElots of

Counter-intuitive differences

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My Activity

Lecture series for my related buddies

✓Cinnamon members

✓My portfolio

✓ Innovatube members

✓SeedForAction* companies

✓Apprentice* Members

To

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My Activity

2016’s new challenge (Innovatube)

Apprentice Program

‣ Exclusively for Entrepreneurial Engineer

‣ To acquire startup-focused business skills to be CEO

‣No excellent business idea required: deadline: 4th May

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My Activity

2016’s new challenge (Cinnamon)

Intelligence 2016 Hanoi

‣ For top tier computer science students who are also talented at math

‣ 6-month program to learn how to apply Artificial Intelligence technologies to real world problems

PitchHajime, Confidential

To compose a pitch which is attractive to investors

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Goal

Understand Investors

Compose a pitch

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Understand Investors

Compose a pitch

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Understand investors

Who Investors want to invest in?

Excellent teams with disruptive technology to change the world

Investors are not evaluators

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Understand investors

Who Investors want to invest in?

Excellent teams with disruptive technology to change the world

Inaccurate

Example 1; hopeless conversations

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Understand investors

I have a concern on the real user-side demands

We can do the marketing through partnership strategies rather than directly doing marketing.

In detail, xxx

Investor

Entrepreneur

Example 2; hopeless conversations

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Understand investors

I have a concern about the expandability of EdTech businesses to regional scale

I think it is still possible in our case because ….

Investor

Entrepreneur

Investors just want to find business partners

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Understand investors

I want to collaborate

but it could be too risky

Investor

Investor

Only two factors which can convince investors

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Understand investors

I want to collaborate

but it could be too risky

Investor

Investor

(1) The team and the field are my favourite

(2) I can imagine the next round fundraise

Pitch will help them to understand those two

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Understand investors

(1) The team and the field are my favourite

(2) I can imagine the next round fundraise

Pitch

Team Preference depends

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Understand investors

Team Preference

Common Entrepreneurial

TendencyChemistry

Depends on InvestorsA likes tech geeks B likes detail-oriented guys C likes hyper risk takers D likes crazy visionalist… etc.

Observable common natures- Fact Oriented - Hard work - Responsive - Ability to attract talents - Product/UX Oriented - Fail-first minded

Serial Entrepreneurs can perfectly behave as entrepreneur

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Understand investors

Depends on InvestorsA likes tech geeks B likes detail-oriented guys C likes hyper risk takers D likes crazy visionalist… etc.

Observable common natures- Fact Oriented - Hard work - Responsive - Ability to attract talents - Product/UX Oriented - Fail-first minded

Investors don’t like ambiguous broad vision

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Understand investors

Your whole visions… what is it???

Growth Hack

Marketing

Product Current Product is just a part of the vision

Know a lot about techniques

Tagline

Product description is a part of marketing

tactics

Should respect marketing message on top

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Understand investors

Marketing Message*

Features

Concise, attractive value proposition

(one sentence)

Operation

All the features has to be 100% consistent

Operation also has to be consistent with the

marketing message

*Marketing message = Unique Value Proposition

Example of non-product-oriented communication

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Understand investors

I have a concern on the real user-side demands

We can do the marketing through partnership strategies rather than directly doing marketing.

In detail, xxx

Investor

Entrepreneur

Product Concern

Doesn't sound

product oriented

Field Preference depends on Investment Thesis

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Understand investors

Investment Thesis:

In order not to be too random, we (professional investors) usually have our own view of the market. only invest in companies whose strategy is along the investment thesis

Example of the investment thesis (my case)

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Understand investors

O2O (Online to Offline)

Enterprise softwares

Video

Edtech (Education Tech)

Fintech (Financial Tech)

IoT (Internet of Things)

Market Opportunity in SEA

SEA is now experiencing a dramatic increase of consumption, and it first affects on O2O area, e.g. F&B, fashions.

Work efficiency will be dramatically improved because of huge smartphone penetration and evolution of app technology

Smartphone video consumption will get bigger and bigger with the establishment of broadband internet/3G environment

Big demands in Low-cost, remote education in SEA especially in (1) Language (2) 15-18 years old (3) Under 12 years old education

Several IoT areas have been proven as market and applicable to SEA regions; e.g. Healthcare devices, Home security,

(1) payment solutions with low credit card penetration (2) rise of asset management demands e.g. stock markets

You can’t change the investment thesis

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Understand investors

I have a concern about the expandability of EdTech businesses to regional scale

I think it is still possible in our case because ….

Investor

Entrepreneur

This is Investment

Thesis

Impossible to change

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Understand investors

I want to collaborate

but it could be too risky

Investor

Investor

(1) The team and the field are my favourite

(2) I can imagine the next round fundraise

There are many types of investors

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Understand investors

Amateur Angel

Investors

Professional Angel

InvestorsSeed

VCSeries A+

VC

Final goal for professionals are successful exit

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Understand investors

Amateur Angel

Investors

Professional Angel

InvestorsSeed

VCSeries A+

VC Exit

No clear story

Everybody reverse-calculates from possible exit

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Understand investors

Professional Angel

Investors

Seed VC

Series A+ VC Exit

What is the exit option?

What Series A+ VC look for?

What Seed VC look for?

1. What is the possible scenario to convince Seed guys? 2. What evidence we can prepare for the Seed round?

3x3x

That mechanism reduces the diversification of ideas

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Understand investors

Professional Angel

InvestorsFounders

Very interesting B2C ideas here! Very attractive

That mechanism reduces the diversification of ideas

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Understand investors

Professional Angel

Investors

Seed VCFounders

Very interesting B2C ideas here! Very attractive but

I don’t believe in B2C in SEA yet

No way to support unfortunately

They don’t understand us well!

Communicate with them casually as early as possible

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Understand investors

Professional Angel

InvestorsFounders

What do you think about the market?

ah, could be hard..

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Understand Investors

Compose a pitch

Wrap up three key points

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Compose a pitch

The team is my favourite

The field is my favourite

I can imagine the next round fundraise

I have a viable entrepreneurial mindset

having same investment thesis as yours

which is also attractive for later stage investors

Wrap up three key points

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Compose a pitch

The team is my favourite

The field is my favourite

I can imagine the next round fundraise

I have a viable entrepreneurial mindset

having same investment thesis as yours

which is also attractive for later stage investors

Only this one can be generalised

Show off as if you know how to execute

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Compose a pitch

- Fact Oriented - Hard work - Responsive - Ability to attract talents - Product/UX Oriented - Fail-first minded

Use simple word directly related to product

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Compose a pitch

…because Investors does not like abstract discussions

Cheap

Simple

Fast

Easy

Effective

Cool

Healthy

Painless

Examples of direct benefits to users

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Compose a pitch

1. Entrepreneurial mindset; Obviousness

Investors doesn’t like balancing something because it lacks of clarity

Remove ambiguity from messages. It looks stupid.

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Compose a pitch

1. Conceptual words

We are not just a service provider, but a marketplace.

2. Ambiguous Analogy/Metaphor

Uber for human resource

3. Unmeasurable/Abstract adjectiveInnovative way of communication solves the problem of loneliness

We provide a web service to connect clients and consumers

Crowdsource of recruiters to widen the human resource database

Fast transfer of photo data to minimise the stress of photo sharing

Pain is not a structural problem. Individual User.

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Compose a pitch

‣ Huge mismatch

‣ Unfortunate situation because of lack of education

‣ High tax ratio

‣ People are too lazy to always take care of xxx

Example of non-user-centric pain description

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Compose a pitch

keyword

ULTIMATELY

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Compose a pitch

if I were an investor who has an investment thesis

We will have some enterprise software startups from Vietnam

by leveraging latest technologies

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Compose a pitch

Our product ultimately simplifies video call conferences.

No messy preparation needed.

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Compose a pitch

Our service can allow app developers to hire QA (quality assurance) resources

within a minute