Over a cup of chai at London restaurant Dishoom, Nina Mohanty tells me about the woes of trying to convince investors that her product is important. “It’s not for them, so they don’t get it,” she tells me. “At a point in time when DEI advocates are promoting that diverse teams will improve the innovation that gets created and, in turn, that innovation’s success, founders are finding it difficult to raise funding when solving problems that are too diverse from a VC’s lived experience.”
Although Nina complains, she has raised £1m for her fintech Bloom Money, a platform that digitalises community savings clubs for immigrants. “The concept is very much a global South behaviour, so not something VCs here typically come across — so it’s not easy to raise, but it is possible.”
Here she shares her top tips for convincing VCs to invest, even if they don’t personally get it.
Look for the willingness to understand
If VCs can invest in quantum computing, carbon capture technology and AI without being subject matter experts, they can understand and get behind what you’re building. Look for investors who have the attitude, perspective and interest to try and understand the problem that you’re trying to solve. It can be difficult to suss out early on, but you’ll be able to tell from the questions they ask, who they want to introduce you to and who they compare you to.
Sell yourself
Investors don’t need to necessarily understand the ins and outs of the market you’re trying to solve for. They need trust that you — the founder — do. What makes you have founder-market fit? Why are you the person to solve this problem? I’ve been a fintech operator at Klarna, come from an immigrant community background, speak multiple languages and live in an area with a high density of immigrants. That’s not to mention the extensive market and audience research I’ve done on my subject matter.
You also want to show investors that you’re able to reach the communities you’re looking to build for. Have you worked with them before in a previous job, as pro bono work, as a volunteer or by any other means? My lead investor says, “I’m not actually sure that I understand what the product is, but I believe her when she says that the market is big and I believe that she is the one that can build it.”
Provide tangible data
At the end of the day, VCs need to make financially sound bets. Initially, the story I was telling convinced investors this was a good thing to do but as a social enterprise or charity, not as a profitable business. When I switched the angle to explain the business case — including stats like there’ll be 110m non-European migrants across Europe in the next 20 years — the need for Bloom was better understood.
So, what data can you give investors that will paint a more vivid picture of your market? What are some tangible things they might have seen in their world that back up what you’re saying? A small example with us is telling German VCs that maybe they’re seeing an increase in Syrian restaurants due to increased migration.
Lean into your own numbers
Try and get as much data as you can early on. Figure out your market sizing; build a proof of concept and go out and test it with your target audience. If you can’t do that, talk to your audience, send out surveys and do as much market research as possible. Collate and analyse the data you collect. Use this to show VCs early signs of want and need for your product.
Make sure you myth bust
Don’t expect people to know what you know and also expect ‘knowledge’ to come from generalised stereotypes about specific demographics. A common misconception Bloom Money faces is that people believe immigrants don’t have money so they won’t pay our fees. It’s your job to educate the VC on the market and its potential and back it up with evidence — either your own or from industry benchmarks. But also, don’t presume all VCs are fools. That’s not going to go well.
…But don’t over-explain
It’s easy to get bogged down in the weeds of the historical, social and demographic context of what you’re doing when you’re serving an underserved community. I get it, you want to explain why this should exist and why it’s going to work while doing the people justice. However, in the early stages of company building and initial conversations with a VC, focus much more on the storytelling, the company vision, the product roadmap and how you’re going to monetise.
Highlight success stories
To help you make a compelling case, highlight companies that have served your market, who have used your business model or who have raised huge rounds of funding. It’s just another data point for VCs to be able to use to lower their risk. For example, we often say we’re the Chime (US fintech) for European migrants. It helps explain what we do. You can also highlight customer success stories. Who has benefitted from what you do and is willing to leave you a testimonial that you can share with your deck?
On the subject of… convincing VCs
1. How do VCs decide who to back? VCs from LocalGlobe, Seedcamp and Octopus Ventures share how deals get done.
2. Does it matter what you look like? One from the Sifted archives.
3. Here’s how to build a convincing value proposition.
4. Write a great fundraising blurb. Nail your company synopsis to reel investors in.
Read the orginal article: https://sifted.eu/articles/vc-invest-product-bloom-money/
