A panel of investors at a travel conference always raises the interest of startups and incumbents as to what the money-men (sadly, they always appear to be men) are looking at.
And with Asian online travel brands commanding an increasing amount of the capital flowing into the industry, there is an enormous amount of attention on what those in the region are thinking when they consider throwing money into companies, new and established.
The WebinTravel conference in Singapore this week saw a collection of investors and one on the end of a successful and high profile exit share their ideas.
The panel featured the following:
Below are some notes and analysis from that session:
- Investors are increasingly "gambling with money", leading to a "fundamentally asymmetric problem" in private equity that that incentivises risk-taking at the expense of reason.
- Some backers will only now look for companies that will lead to a sub-unicorn or higher level of exits, avoiding any business unless it's going to capture something in the region of $500 million to $1 billion.
- Startups MUST now show a definitive strategy around customer acquisition, especially those that are operating consumer-facing businesses. Too much money being wasted on marketing when the incumbents are so strong.
- If growth is the only way to demonstrate differentiation, then there is a fundamental problem with a company's strategy.
- Trend emerging that investors are now wanting to see earlier signs of profitability, rather than a operating-raising-operating-raising strategy.
- "Gut instinct" still plays a significant part in when to press the green button and invest, although hardly any companies are "found cold" as most are discovered via recommendations through an individual's network.
- Most companies will now often be tracked for at least 12 months before term sheets are signed.
- Investors want to see clear illustration of how founders and/or management will cope with various scenarios when things do not go so smoothly - what tactics will be used to change strategy, manage costs, etc.
- Startup companies that have an obvious international reach, rather than being solely for their domestic markets, are more likely to attract investment.
image via Shutterstock.