Kelvin Au’s Recipe for Investment: Five Key Ingredients

Kelvin Au

At Level39, our #L39OfficeHours programme puts our members in touch with some expert mentors. This week, tech investor Kelvin Au came to our Canary Wharf base to share his knowledge. Kelvin represents DFJ Esprit – check them out!

After mentoring four Level39 members, Kelvin sat with me and let me know five tips that every startup should hear, if they want their business to be an investable proposition:

ONE: It’s A Team Game.

Let’s get one thing clear from the off, teams are extremely important. At an early stage, you don’t need to have a ‘full team’ either. Don’t get hung up if you don’t have a dedicated marketing guy, for example, as what you need is a dedicated a multi-skilled core team. This core team has to share the same and culture vision as you, the founders. Your team should share a complimentary skills set too, as in the early days, all of your jobs will overlap. You’ll need to have sight of eachother’s work, and you’ll need the ability to step in and pick something up from a colleague. So each team member needs to ‘get’ what each other member is doing.

TWO: Market Opportunity

When you’ve identified your market opportunity through desktop research, surveys and other tired and tested techniques, you need to be yourselves and ask: Is there genuinely a market fit for my product or service? Or am I trying to crowbar something into a marketplace that doesn’t need it? If you’re doubtful, do some primary research in the field. Talk to the buyers from your target industry – they’re the guys holding the chequebooks!

THREE: Real Feedback and MVP

Ideally, you’ll want to have an MVP – a minimum viable product. A MVP is a very simple but usable version of your product. It should be a product that gives prospective clients a feel of what your product offers, without the personal expense to your company of building the product in its final form. An MVP will win you valuable validation and feedback – going into an investors office with an MVP is far more valuable than going in with an idea. An MVP will enable buyers to analyse whether your produce has a  purpose in the market, or can if it can pivot in order to achieve a more saleable purpose. I know that the funding and expertise required to build an MVP is hard to come by, in order to build an MVP – but it might even be worth doing a small seed round to help build it. After you have distributed a successful MVP, this will help you demonstrate traction to further investors.

FOUR: Business Strategy

When you’re past your seed level funding, and are looking for the next round, you must have a higher level business strategy in place. This will cover the finer detail of your business model, revenue generation strategy and customer profiles. You need to ask yourself: who are your key customers? What’s their age and gender? Do they have particular lifestyle choice? What’s their geographical location? And be specific! Another thing you need to analysing how these customers spend money with your business. Do they buy things from you whilst they’re on the bus home? Do they shop in the evening? Does your technology encourage repeat purchases? Do you find revenue through advertising, rather than directly from purchases?

FIVE: There’s Method in your Method

A golden rule is this: Have decent processes in place, right from the off. Even if you’re a bootstrapping your company, even if you’re a 2-person-business, start implementing and following business procedures right from the start. Use things like Google Basecamp to manage your tasks and your team. If you’re an e-commerce company, use Mixpanel to track KPIs from a user or data perspective. When it comes to internal business management: keep a handle on your financials. Even when your biz isn’t making money! These systems will be your bedrock, and the basis of scaling up to the next level. Therefore if your product suddenly goes crazy and starts selling to millions, you will be able to handle it.


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