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This document is intended solely as a rough guide based on

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Contents
4 Expert Insights
Origami Labs: Going from Idea to Minimal Viable Product (MVP)
James Kwan: Getting your first US$500,000 as a Hong Kong
Startup
James Kwan’s Recommendations on Acceleration and
Incubation Programs

16 Funding
How Investors Measure Business-to-Consumer (B2C) Startups
How Investors Measure Business-to-Business (B2B) Startups
Strategies For Interacting With Investors
Typical Fundraising Methods
Snapshot: Funding

22 FAQs: Accelerators & Incubators

Why join an incubator or accelerator

24 FAQs: Pitching
Elevator Pitch
5-minute Pitch
Audience
Snapshot: FAQs
 4

Expert insights
Origami Labs: Going from Idea to Minimal Viable
Product (MVP)

R
unning a business is a journey that takes a different form for every new
entrepreneur. Elements of the process such as ideation, prototyping, fundraising,
and selling are common to many new businesses, but every entrepreneur starts
from a different place, is inspired by different events, and is faced with new challenges
at every stage.

For the founders of Origami Labs, a Hong Kong-based startup that developed the ORII
smart ring, this journey started when they were studying at the Hong Kong University
of Science and Technology. Their first product, ORII, uses proprietary bone conduction
technology to silently transmit sound from finger to ear when the two are touching.

“In hindsight, the inception of a concept feels like destiny. But in the moment, it feels
much less decisive,” says Origami Labs CEO and Co-founder Kevin Johan Wong.

Wong grew up with a visually-impaired father, who found it difficult to use smartphones
given their limited accessibility options. This built a foundation for Wong’s interest in
the audio space, but coming across research on ‘silent audio’ technologies was the
trigger that set everything into motion.

Origami Labs’ bone conduction technology has been a cornerstone of the company’s
product design and marketing, and set the stage for the company’s eventual pivot
from wearables to voice-guided, screen-free technology. However, the ORII ring–a
hallmark of innovation and design thinking in Hong Kong startup circles–remains the
product the startup is best-known for.

Foundations

“Having grown up in an entrepreneurial environment (in a highly hands on family

business), my first inclination was to build and test,” says Wong. With thorough and
diligent researching, and ‘countless’ trips to the scrap yard, months later, the team
managed to put together prototypes to test on their family and friends.

It was then that the next phase of growth had to be initiated. Origami Labs wanted
to build a product that could sell commercially and work perfectly, and for that, they
needed funds. Among other things, the fledgling company needed better materials for
 Expert insights 5

better prototypes, which would bring them a step closer to real-world users.

The company managed to raise a small initial seed round in order to develop a
marketable prototype. As Wong explains, when it comes to products with lengthy
product development cycles, an early funding round is necessary in order to maintain
factory visits, obtain samples, and keep up the pace in order to deliver a product on
time.

After delivering their first products to the backers of their online funding campaigns,
Origami Labs was ready to fundraise again and scale the company up. In this more
serious process of raising their pre-Series A and Series A rounds, having a history of
traction through their initial backers, and a list of partners and contracts, made all the
difference to investors.

“Finding the right leads and the right people is extremely important,” Wong says.
“There is no magic in the fundraising process, and building real relationships and
having real conversations helped us get closer to an actual fundraise. It’s just as much
about a match between the two parties and not just about finding the best and biggest
fund.”

The smart ring is now available for purchase on ORII.io for US$129. It’s come a
long way from initial prototypes—smaller in size, able to pair with most Bluetooth
headphones, able to sync with a voice assistant, and outfitted with gesture-controls
to enable a greater range of functions and commands. This current version has come
about after countless prototype iterations, and multiple fundraising rounds. It also
paved the way for the company’s next phase of development: screen-free, gesture-
controlled interfaces.
 Expert insights 6

The Pivot

One thing investors tend to look for in their portfolio companies is evidence of
scalability. In other words, can this company continue to innovate and grow, or is it
likely to reach a critical mass of customers and stagnate?

For startups, in many cases, this means making a tough call and diverging from the
initial idea that set the entrepreneurial journey in motion. Twitter is one of the most
famous examples of a drastic pivot: the company began as Odeo, a podcast service
allowing people to search for and subscribe to all kinds of podcasts. However, as it
became clear that this line of business wasn’t scalable in light of the release of iTunes,
Odeo management sourced pivot ideas from its team in a bid to salvage the company.
Twitter was conceived during this process, and soon became the team’s main focus.

Over the years, the pivot has become something of a classic startup move. It’s
engineered many of the services and platforms we now rely on, such as YouTube,
Groupon, and Flickr. It’s also been the Hail Mary for many startups in need of a fresh
outlook.

Similarly, Origami Labs also pivoted due to concerns about long-term scalability.
However, rather than a complete reworking of the company’s product, the team used
what they had learned from developing the ORII ring to find their new product design
ethos. Gesture- and voice-based navigation and screen-free interfaces became the
new focus of the startup’s innovative power.

“[We pivoted from] building gadgets, to now building a network of discreet audio
computers that enable users to experience an entirely new audio landscape,” says
 Expert insights 7

Wong. “Connecting people and machines, our products let people talk to each other,
and talk to machines, more seamlessly than ever before.”

Wong is positive about the pivot, and the opportunities it presents in terms of a screen-
free world that is accessible to those with visual or auditory impairments.

“That’s the positive side, the wild potential and insatiable curiosity to know what lies
around the corner for a product that fulfills your vision even better than the first,” he
says.

However, such a change in the company’s vision and goals doesn’t come without
consequences. Wong says that it has made him truly understand and appreciate how
long the innovation process can take–particularly when aiming to create something
absolutely new to the world, designed to inspire a future generation of thinkers and
inventors.

“It is a summit that we are truly yet to climb, and are only in the midst of scaling its
slopes,” he says.

Growing and Reflecting

Over the course of Origami Labs’ journey, they’ve been faced with many challenges.
The founding team in particular has needed to use–and at times learn–different skills
for every stage of the company’s growth. This has led Wong and the team to prioritize
the people they hire, who make the difference between a cohesive and healthy team
and a less innovative one.

“We play the long game when it comes to people,” Wong says. “Some of our best
team members are people that we’ve associated with or worked with for an extended
period of years–I’d relate this process to making friends that you respect.”

When scouting for new hires, Wong says the team looks for “game-changers, where
the very thought of them joining inspires new thoughts and possibilities.”

For Wong, the experience of being a founder and growing Origami Labs from an idea
to a fully-fledged direct-to-consumer startup has been one that he wouldn’t trade for
anything.

“It’s taken longer than I thought!” he says. “But it’s been a fabulous experience
nonetheless. Who gets to say that they wake up every single morning with not a single
regret, but just full to the brim with excitement for what lies ahead? The experience of
being a founder is not for the faint of heart, but if you can appreciate the journey, what
you will find is truly priceless.”
 Expert insights 8

James Kwan:
Getting your first US$500,000
as a Hong Kong Startup

F
undraising is one of the essential elements of
getting a startup off the ground and growing
it to the stage where it can run sustainably.
However, it is also one of the most daunting aspects
of being a founder; without the necessary know-
how, it is hard to execute well.

As a serial entrepreneur with management experience in Hong Kong and the U.S.,
James Kwan is intimately familiar with the process of fundraising and taking part
in acceleration programs. He’s worn many hats, including building an Asian textile
company to IPO, where he was listed on the company’s prospectus for the Singapore
Exchange.

He is now the Executive Chairman of Jumpstart Media, which has been steadily growing
under his leadership since 2017. Aside from publishing Jumpstart, the company has
also led several projects to elevate the regional startup ecosystem, including building
acceleration programs and non-profit innovation workshops for kids.

In Kwan’s opinion, Hong Kong is one of the easiest places for a first-time founder to
connect with investors and raise money.
 Expert Insights 9

JS: What’s the first step to finding investors?

JK: The first thing to do is ask your mentors, advisers, or well-connected members of your
network for referrals to investors who they think would be a good fit. In Hong Kong,
finding investors is relatively easier–primarily because the city is geographically small,
so the startup ecosystem is also small. It’s a different story in the U.S. and China.

Connecting with venture capital (VC) firms is straightforward because there are so
many events. If you go to any startup conference, there’s going to be investor-matching
and you’ll find investors on the panels.

You have to
You can also look at Crunchbase, which is a site that provides
understand what
investor information from around the globe–who and what
the investor focuses
they invested in, and at what stage.
on. If you’re an
ecommerce startup,
If you’re not looking for VC money, then you can consider
don’t approach a
angel investment. You can find them through associations
biotech investor.
like the Hong Kong Business Angel Network.

You have to understand what the investor focuses on. If you’re an ecommerce startup,
don’t approach a biotech investor. You also have to understand the stage of your
startup. If you’re in an early-stage, you need to find investors who are willing to work
with startups in your stage and sector.

JS: Are there any ways to get funding, other than going to investors?

JK: Yes, another route to finding investors is going through an incubation or acceleration
program. These are sometimes government-backed, such as the Cyberport and Hong
Kong Science and Technology Park programs, sometimes corporate-backed like Lane
Crawford’s The Cage, or independent incubation programs run according to industry
sectors or by a group of VCs, like Betatron1.

These programs sometimes–but not always–offer funding to startups who successfully

pass through to the end. In addition, most accelerators usually have a ‘Demo Day’ at
the end of the program, where startups pitch in front of an audience which usually
includes investors and media2.

JS: How much is the average ticket size?

JK: Again, it really depends on your stage and vertical. Many startups are in a ‘high flying’

1
Find a list of James’s recommendations on acceleration programs summarized at the end of
this story.
2
For other benefits of acceleration and incubation programs, refer to page 22 of this ebook
 Expert Insights 10

vertical (e.g., fintech, artificial intelligence (AI), blockchain), where the market dictates
your multiples and growth. If you’re in other verticals, the seed stage could be between
US$300,000 and $500,000 and go up to $1 million.

If you’re a first-time founder with no track record, you’re probably going to raise
US$300,000 to $500,000. At the pre-A stage, you might get between US$1 to $2
million. The average Series A round in Hong Kong these days is about US$3 to $5
million.

JS: How does one gauge the appropriate amount?

JK: You could put off investors if you ask for too much. If you ask for too little, investors
will likely just take it, which is why you must know the stage of your startup. It’s
also essential to consider the location. In Vietnam, India, and Indonesia, people
are not afraid to say: “My valuation is US$250,000, I only need US$20,000.” They
are willing to accept less money and value their companies lower in order to retain
majority ownership. In Hong Kong, however, people feel compelled to ask for more,
and correspondingly, tend to overvalue.

Sometimes, a good strategy is to throw out a slightly higher number and leave it up to
the investor to do due diligence, but it’s also essential to be grounded when it comes
to your true valuation. If you’re in the middle of dealmaking and everything else has
lined up perfectly for the investor, they could immediately be put off by an over-the-top
‘ego’ valuation.

It’s vital to have comparables in the industry. If you quote an obscenely high valuation,
investors will feel that you are too unrealistic or arrogant to run a startup effectively.

JS: How much equity is fair to give up in the first-ever funding round?

JK: If you’re a very early stage startup, or you’re in the ideation stage, people tend to take
advantage by asking for more equity. In Hong Kong, I would say that companies in the
seed stage are going to give up around 5% to 10% . For pre-A, people would give up
about 15%, and about 20% for an A-round. Following this structure strictly, startups
will have to give up three rounds of equity, which takes more and more away from the
founders.

This issue is why many people don’t raise a pre-A round. Many choose to either start
from a pre-A, or target a more aggressive first raise, so they only need to give up equity
twice. By the time the Series A is over, most people have given up approximately 30%
to 35% of their company. Beyond that milestone (Series B or later), the equity stakes
that you give up are going to be slightly lower, or around 10%.

There are always outliers. In Hong Kong, TNG Wallet gave up quite a bit of equity
 Expert Insights 11

because its Series A closed at US$115 million. Conversely, you may hear about teams
that value the company at $500,000–they get $100,000 and give up 20% in the seed
round, for very little money.

It also depends on how you approach investors. They’re probably going to evaluate
whether you’re desperate for the money, and whether you know what you’re doing.
Do you have good ideas, and do you balance them with sound business acumen?
Overall, I would say you’ll give up 30% to 35% by the time you raise your A-round.

JS: How much information should I share with a potential investor?

JK: Many startups either give too little or too much information, but there are some rules
you can go by. If you sense the investor is not serious, you could give them a teaser
deck and a minimum snapshot of your financials. In most cases, you’re not profitable
in the early-stage, and that’s okay. You can tell them: “We’re not profitable, our burn
rate is this much, and we intend to be profitable by this time.”

Even if you don’t
actively seek out
foreign investors,
there’s no reason
why you shouldn’t
approach them
if you have the
opportunity.
Don’t give your full deck to every investor. There’s something
called ‘overexposure.’ You want to keep certain things close
to the vest, especially at an early-stage and if you’re going to
pivot. But at the very least, you should have a one-pager. It’s
a snapshot that you’re comfortable sharing with everyone;
it could also include some revenue information. If there’s
additional interest, you can provide a teaser deck. If you feel
comfortable with the investor from the start, you can give them
a full deck.

As you get nearer to closing the deal, you should check the investor out on Crunchbase
and make sure they are active and have a history of investing in your sector. Many in
the investment space are time-wasters; they’ll ask for your deck, but a Crunchbase
search will show that they haven’t invested in the last three years. It’s in their DNA to
want to know more about every startup, but whether or not they have the interest or
capability to invest is another thing. In rare cases, startups have been known to give
investors’ money back upon discovering new things about them.

JS: Is it better to raise funding inside or outside of Hong Kong?

JK: Going back to my first answer, investor-matching takes place at almost every
conference and the VCs who attend are likely prominent players in their countries. If
you meet them in Hong Kong, they will likely want to invest in startups based in the
city. For a Hong Kong-based startup, making these connections is a straightforward
process that makes it simpler to raise here rather than in a foreign country.

These days, bank financing is also an option. Earlier, it was not as easy for SMEs to deal
 Expert insights 12

with finance in Hong Kong, since many banks hadn’t fully looked into the potential of
startups as a new market. They faced typical problems like a lack of financial history,
lack of collateral, and unvalidated products or technologies. Most banks didn’t want
to give loans to startups because of the risk involved. But now, banks are attempting
to tap into the startup and SME sector, so it’s possible to get a start-up loan. With
support from the government, many banks now offer special financial products that
are backed by guarantees, so it’s less risky for the bank and preferential in some ways
for the startup.

I’m a true believer in raising money outside of Hong Kong as a supplementary source.
The easiest options would be in China, Singapore, and Southeast Asia. Even if you
don’t actively seek out foreign investors, there’s no reason why you shouldn’t approach
them if you have the opportunity.

JS: What is your advice for closing an investment deal?

JK: Speed. If there’s interest, do not waste time. Go for a drink that night, discuss the
terms, work on the contract, and put together a Memorandum of Understanding
(MOU), Letter of Intent (LOI), or term sheet. While you want to move as quickly as
possible, know that you want the money before going for it. Don’t fundraise before
you know you are willing to give up equity. Know your best case scenario and worst-
case scenario before going into it, so you’re prepared to strike as soon as possible.
 Expert insights 13

James Kwan’s Recommendations on Acceleration

and Incubation Programs

Disclaimer: Please note that this only includes a subset of the acceleration and incubation
programs in Hong Kong. You may also reference the Startmeup site for a further listing of
incubation and acceleration programs.

Cyberport
Program Highlights:
• Supported and backed by the HKSAR government, with strong connections
across Hong Kong and many other geographic locations (beneficial for startup
expansion and growth)
• The program does not take equity, so it is beneficial for startups who would pre-
fer not to dilute their company’s ownership
• Many different programs are available based on a startup’s stage (from ideation
to growth stage)
• Rent-free workspace is available for participants of the program on-site at Cyber-
port, but using it is not mandatory

Hong Kong Science and Technology Parks Corporation (HKSTP)

Program Highlights:
• Similar to Cyberport, HKSTP does not take equity and is supported by the HKSAR
government, with strong connections and resources to foster business growth
and expansion
• Three different programs on offer, focusing on: web and mobile technology (In-
cu-App), technology (Incu-Tech), and biotechnology (Incu-Bio)

These two programs regularly host activities and post updates, which can be
checked online through their websites. Attending their events is a good opportunity
to meet other startups and business ecosystems.
 Expert insights 14

Betatron
Program Highlights:
• Investor roadshows across Asia and North America to help grow your network
• Demo Days in Hong Kong, Singapore, and Silicon Valley to provide you with
more exposure
• Founded by six different investment firms, allowing you to gain more experience
and learning through the various networks
• Since its founding in 2016, the program has recruited 15 to 20 startups per year,
which means they have a significant amount of experience with finding inves-
tors, recruiting advisors, expanding its network, and learning how to run the
program better
• Requires three gatherings over two-week periods, which is great for remote
teams, and for Hong Kong based teams, it allows you more time to work on your
business between the gatherings

Brinc
Program Highlights:
• They have a good and varied network of reliable partners across the Greater Bay
Area, Middle East, and North Africa (MENA) region, Poland, and India
• Great support system for hardware or Internet of Things (IoT) startups
• The manufacturing, foodtech, and cleantech verticals are based in the Greater
Bay Area

HKAI Lab
Program Highlights:
• 12-month program where they work closely with AI startups with strong support
from their researchers and scientists
• As the program is supported by the Alibaba Entrepreneurs Fund and Sensetime,
with support from HKSTP, Alibaba Cloud, and Alibaba DAMO Academy, there are
a wealth of resources to help you along your journey
• There is also a US$100,000 investment from Alibaba Entrepreneurs Fund through
a SAFE note
• With access to proprietary technologies, it would be a good way to push the
growth for strong individuals or companies
 Expert insights 15

The Cage by Lane Crawford

Program Highlights:
• Run by Lane Crawford, this is a 12-week program focused on early-stage retail
and lifestyle fashion startups
• Opportunity to partner with The Lane Crawford Joyce Group on corporate con-
tracts
• Through their in-depth knowledge of retail and the opportunity to work with
them, supplemented by benefits such as visits to China to better understand the
landscape, this will be beneficial to startups in this industry

Kaleidoscope Lab by Peninsula Hotel

Program Highlights:
• Backed by The Hongkong and Shanghai Hotels, Limited, which covers brands
such as The Peninsula, they are focused on technology solutions for the luxury
hotel sector
• They work closely with the teams to provide solutions that the hotels are looking
for, so there is strong buy-in for the solutions, increasing the success rate of the
startups
• After the 12-week program which includes mentorship and advisory, you can
present your solution for a potential proof of concept with the hotels

The Mills Fabrica Incubation Program by Nan Fung Group

Program Highlights:
• 12-month program with a focus on technology and fashion, which may include
wearables, materials, and supply chain innovation
• Focused in Hong Kong and the UK, which allows you to gain a global network
• Aims to provide exposure, connections, and advice to allow you to grow your
business
• In Hong Kong, their hub is located at The Mills in Tsuen Wan, where they have
the latest technologies to support your growth
• They have a fund that further supports the growth of the startups

Eureka Nova by New World Development

Program Highlights:
• This program is backed by New World Development, which allows startups the
opportunity to gain closer insight to the many industries they are in, including
hospitality, retail, and transportation
• They often partner with other corporates as well, which have included Tencent
and Mizuho, which would allow the startups to gain exposure in other industries
and markets

Please note: James Kwan is on the Advisory Board for the Eureka Nova Program.
 16

Funding
How Investors Measure
Business-to-Consumer (B2C) Startups

H
ow an investor measures a business-to-consumer (B2C) startup depends on
the type in question. Each industry deals with different external and internal
factors. For example, a consumer brand may be impacted by regulation, the
trade war, material shortages, and so on.

Investors will look at B2C startups from all angles. Strong validation builds a robust
case for valuation, justification, and the next round of funding. The process starts with
the idea: Is the product solving a problem, or is it just a solution looking for a problem?

How the product is made is also important. The size of the factory you’ve contracted
indicates whether you’re a big or a small customer. Did you get their ‘A team’ to
service your account? When walking the production line, how many resources has the
factory dedicated to your product? Is the factory buying safety stock and paying for it
themselves? How many shifts are making your product? Seeing the number of pallets
that are ready to ship reflects the quality of demand, as does the shipping frequency.
These factors indicate the manufacturer’s confidence level.
 Funding 17

On the social media and digital marketing front, key opinion leaders (KOLs), unboxing
videos, product videos, comments, feedback, and other indicators are critical and
can make or break you. How are your competitors responding to your strategies? By
pricing? Ad campaigns? Copying or matching? Maybe an offer to invest, or to enter
into some kind of commercial agreement?

The size of the distributor, its reach, and the support it provides also say something
about your business. Product placement on store shelves indicates how serious the
retailer is about your product. If the product moves, then they will place more orders.
Of course, financial documents are also essential resources, and investors will look for
upward trending sales, additional revenue channels, and other smart sales strategies.

How Investors Measure

Business-to-Business (B2B) Startups

S
ales leads for business-to-business (B2B) startups take longer to close and need
to be prioritized. The company’s revenue stream should be on the path to self-
sufficiency, where it’s able to fund growth. Deals in the pipeline don’t stay fresh
for long, meaning standardized processes must be in place, so anyone can pick up
and take over.

B2B customers often require tailored solutions, so the customized element is critical.
There are no one-size-fits-all products in this scenario. Consequently, companies often
build clunky in-house solutions that are less efficient and intuitive to use because there
is no third-party product that fully fits their needs.

The team and standard operating procedures are fundamental for B2B startups.
Industry experience is invaluable, and the depth of the team’s collective network is an
indicator of its ability to make meaningful connections. A focus on customer service is
also vital. Can your competition overtake your defenses?
 Funding 18

Strategies For Interacting With Investors

A
lways be pitching. You should constantly be positioning the brand, company,
and yourself as the domain expert. Ideally, when you’re ready to raise money,
investors will have already heard of your company and know what it does.
If you get the opportunity, have an informal coffee with an investor even if you are not
raising money, so you can maintain the relationship and create a bond. Be a storyteller
as opposed to giving a presentation. No one wants to hear a
Be a storyteller as lecture; make it exciting, but keep it real. Create a sense of
opposed to giving urgency.
a presentation. No
one wants to hear Oversubscribe your funding round by pitching to more investors
a lecture; make it than there are spots available. Always follow up immediately
exciting, but keep it after a meeting. How you speak, how you carry yourself, how
real. Create a sense confident you are in your product, how prepared you are–all of
of urgency. this matters to investors.

Always talk to investors about your startup in a confident way. Be a subject matter
expert. Don’t come into a meeting not knowing what you want; it’s okay not to be sure
of what you’re doing, especially if you’re just in the very early stages of your startup,
but you need to have an idea of what’s going to happen in the short-term. Overselling
or over-pitching should be avoided, as this can lead to doubts about your company.

You need to be entirely honest with all your investors from day one. There are things you
don’t need to disclose, and keeping quiet about them doesn’t constitute dishonesty,
but you will quickly discredit yourself and your startup in the community if you are
dishonest.

Picking an investor is like picking a business partner: synergy is vital. Also, they should
let you run your business the best you can. They can give advice, but they shouldn’t
impose requirements that take you away from your day-to-day operations. Unrealistic
expectations or requests can kill an investment deal.

Another thing to remember is that when an investor says ‘no,’ it doesn’t mean it’s a
‘no’ forever. It means the presentation you have given today isn’t compelling enough,
which can always change in time.

Also, don’t be afraid that an investor might steal your business idea. Everyone thinks
they have the next big thing on their hands, but it’s not the case 99% of the time.
Besides, most investors are too ethical to consider it or don’t have the time or interest
to do so.
 Funding 19

Typical Fundraising Methods

T
here are different types of investment methods that people can use. Typically, if
not pursuing bank or other debt (i.e. loan) financing, startups use one of three
methods: a SAFE contract, a convertible note, or selling a direct equity stake.

A SAFE contract, by its nature, is a document that should not be amended by the
parties, as it is built for simplicity and to avoid negotiation. Short for ‘Simple Agreement
for Future Equity,’ it is known as one of the most founder-friendly ways to raise money.
It promises investors an amount of equity upon the next round of fundraising or the
sale of the company.

Investors in Hong Kong may have some reservations when it comes to SAFE contracts.
Until September 2018, SAFE contracts were conducted on a ‘pre-money’ basis; that
is, when startups were raising smaller seed rounds, the SAFE was considered a bridge
round between a seed and future-priced round or as a simple means for investors to
quickly add financing where a full priced round was not appropriate.

However, as seed round funding amounts grew, Y Combinator (which offers the
standard SAFE contract on its website for anyone’s use) decided to update its contract
to reflect the ‘post-money’ valuation of a startup instead. This update measures SAFE
ownership after all the new money from the SAFE round has been accounted for,
allowing for a clearer understanding of equity ownership and dilution. It benefits
both founders and investors. Y Combinator summed up their reasoning in a single
statement:

“It’s critically important for founders to understand how much dilution is caused by
each safe they sell, just as it is fair for investors to know how much ownership of the
company they have purchased.” (Y Combinator, September 2018).
 Funding 20

SAFE contracts follow the legal format outlined by Y Combinator, and it can’t be
considered a pure SAFE if any words or concepts are changed. Thus, if you do wish to
change the Y Combinator SAFE, it is best to seek legal advice on how to move forward.
Several tools can be used to assess whether a SAFE contract has been changed from
its original form: one of them is to use Microsoft Word’s ‘Compare two versions of a
document’ tool (found under the ‘Review’ tab).

If you go for a convertible note–or another form of debt agreement that can be converted
into equity in the next funding round–it is best to work with a lawyer to review the legal
documentation. Despite requiring a lawyer, it’s normally a less intensive legal process
than issuing straight equity.

Issuing straight equity is the most complex of the three options and requires a lawyer
because there are many different things to consider (such as the actual legal mechanics
for issuing shares and putting in place a shareholders’ agreement).

Beyond these three methods, usually facilitated by venture capitalists or family offices,
there are the ‘traditional’ types of financing provided by banks in the form of start-up
loans or guarantee financing schemes. Revenue generating startups may also be able
to structure a simple loan from third parties who receive interest on their loan rather
than a conversion right into equity.

Although SAFEs have become very common for early-stage fundraising, some investors
prefer other contracts (primarily since SAFEs give investors very little protection). Some
don’t understand them, and since a U.S.-based accelerator pioneered this type of
contract, others worry that it may not transfer well to the Hong Kong legal framework.

These factors lead many to go for convertible notes. Of course, the investor must also
know that there is a high possibility that they will never get any money back.

Hong Kong investors come from a variety of backgrounds (accounting, private equity,
investment banking, corporate investment arm, private banking, hedge fund, and
more), so their expectations are very different. Thus, there is no ‘best way’ to raise
money.
 21

Snapshot: Funding
How to interact with Typical fundraising
investors? methods
Always be pitching SAFE Contract:
Position yourself as the domain expert + Should not be changed
+ Founder friendly
Maintain your autonomy
­– May require review for Hong Kong’s
Investors can advise, but don’t let them
legal system
impose
Create a bond Convertible Note:
Have an informal coffee with an investor + Preferred by some investors over a SAFE
even if you are not raising money ­ contract
– May require legal advice

Straight Equity:
­+ Builds up the credibility of your company
­– Most complex way to fundraise
­– Intensive legal process

B2C
The Process The Distributor The Online Presence
What are the resources What reach and What is the level of online
dedicated to the product? support do they engagement with consumers?
provide?

The Idea The Finances

What problem does Are the numbers
the product solve? promising?
How do investors
measure B2B and B2C
Revenue Stream startups? Customer Focus
Is it approaching Are your customers
profitability? being prioritized?

Tailored
The Team Solutions Standard Procedures
What kind of experience and Is there a customized Are there standard operating
network do they contribute? element? processes implemented?

B2B
 22

FAQs

Incubation &
Acceleration
Why join an incubator or accelerator

T
here are different reasons one may join an incubator or accelerator, which
depend on the stage of your startup and what type of support you are looking
to gain. You must ensure that the program makes sense for you by weighing the
pros and cons of each.

Mentors One of the main reasons to join a program is access to mentors.

They can provide industry expertise, network connections, advice
for fundraising, marketing help, and so much more. These mentors
have been vetted by the program, decided to support it, and intend
to help your startup grow.

Capital Many programs offer investment and you may need to give up
equity in return for money. Some programs have a standard
amount of equity taken, while others will negotiate with you. There
are programs that don’t take equity, but you have to fulfill a set of
requirements. Equity, board seats, and other contract terms are
crucial factors that must be assessed in detail, as they significantly
impact your business.
 Incubation & Acceleration 23

Connections to Corporates sometimes partner with companies in the startup

corporates ecosystem to run innovation programs. They could be an excellent
way to gain access to sectors or industries that are relevant to your
business. It’s also helpful to understand how the program plans to
make the connections and whether startups that go through the
program have the potential to be adopted by the entities running
the program.

Classes You can gain valuable insight through workshops and classes.
It will be structured differently for every program. Each program
also requires different commitments, and you need to decide if
they make sense for you and your startup. The program should be
supplementing operations, rather than taking you away from them.

Program Take the time to get to know the people running the program,
Directors and as they make up a significant part of your experience. The other
Managers people who are involved, even if they aren’t at the forefront, can
also provide you with knowledge and support, so don’t miss out on
getting to know them, too.

Bonus

Build Connections with other entrepreneurs

You will have opportunities to interact with other entrepreneurs in the program. Take
the time to get to know your peers. Even if they are in a different industry, there will
be things you can learn from them. This could be anything from digital marketing, to
sales, to managing a team.
 24

FAQs

Pitching
Elevator Pitch

I
magine bumping into a former client while you’re both waiting for an elevator. You
both get in, and they ask you what you’re working on these days. Now comes the
time for the one- minute elevator pitch.

The elevator pitch is one of the most straightforward tools you can rely on when doing
face-to-face networking. A convincing and well-planned elevator pitch can result in
tangible benefits and supporters for your business. So, how do you master the art of
putting one together?

Start by answering some of the most important questions: who you are, what you do,
what makes your business different, who’s the target client, and how your strategy
can ensure consistent growth in the future.

Good elevator pitches always conclude with a unique selling proposition (USP). In
essence, the USP is a call to action and the reason why somebody should be interested
in your project. This final component needs to be the most reliable and convincing
argument of them all.
 Pitching 25

Once you’re done with the presentation, you should be prepared to engage further.
Provide the opportunity for questions and be ready to answer honestly. Anyone who’s
even vaguely interested in the idea would ask to learn more. They should receive
specific information rather than a generic response.

An elevator pitch can also be used during networking events, conferences, trade fairs,
meetings, and even on social media. It gives you the chance to introduce yourself and
provide valuable information about your company without wasting time.

The perfect elevator pitch takes preparation and practice. There’s a fine line between
confidence and being over-zealous. You should sound competent, wholly convinced in
your idea, and have a vision for growth.

Although it’s pretty short, an elevator pitch has to be persuasive. Make it compelling by
filling it with numbers, and showcase your most relevant skills. If you can demonstrate
your abilities and your niche knowledge, your chances of entrepreneurial success will
become much higher.

5-minute pitch

F
ive minutes is sufficient to convince someone that your business is interesting
if you use it to deliver authoritative information and highlight the strength of
your idea. In fact, it’s long enough to secure supporters or even funding for your
business. You must paint a very intricate picture that’s well-researched to yield the
best possible results.

Five-minute pitches are typically utilized when fundraising. It’s also a standard format
at startup events and other opportunities for founders to connect with potential
investors or partners. Now the question is: What do you include in the presentation,
and how do you deliver it in the most stellar way?
 Pitching 26

First, cut to the chase and include only valuable information (it’s always a good idea
to back your words up with a presentation where possible). Focus on what investors
want to know: the concept, how your business is different, how do you plan to conquer
a niche, who’s your target customer, and what your financial projections are.

Showcase a problem, explain how your idea can address this problem, and why the
business is sustainable. Also, highlight what you’ve accomplished on your own. What
have you done since launch? How have you strategized the brand’s marketing and
positioning? How do you compare to the competition, and how has the customer
reception been so far?

Investors know what it takes to protect their interests. Hence, you have to give them a
compelling enough reason to make them take the risk and partner with you. You need
to know your business and your industry inside-out for them to trust your abilities.

An effective pitch has to showcase your confidence and skill sets, which is why
you need to practice. Every detail matters: the way you dress, your tone, your body
language, even the presentation colors you use in your slideshow. Don’t leave anything
to chance. Every single element appearing in your five-minute pitch should be well-
planned and thoroughly assessed.

If it doesn’t add anything to the overall reputation you’re trying to establish, then
remove it. Be cutthroat. This way, you’ll end up with a tighter and more attractive
presentation.
 Pitching 27

Audience

T
he content of a pitch is heavily dependent on the type of audience you’re
attempting to ‘wow.’ Thus, you can’t use the same presentation at trade shows
and when you communicate with potential investors.

Before doing anything else, ask yourself one simple question: Who am I going to talk
to, and what do they hope to gain? Analyzing your audience before pitching will make
your information and delivery style more relevant to them (humorous and lighthearted,
factual, serious, or maybe even a combination of all those).

You can also get in touch with the host or event organizer to find out more about
the people who’ll be listening to your pitch. It’s a good idea to watch footage from
previous editions of the workshop, seminar, or startup pitch event. Seeing how other
speakers have approached the task will help you perfect your pitch.

Speaking to customers, business partners, and investors require different approaches.

Customers want to know the strengths of your product without getting too technical.
Your primary goal is to highlight how your startup is solving problems that they are
experiencing. Business partners want to know how the relationship with you is going
to be mutually beneficial.

Finally, investors want to know how their financial commitment will provide returns.
You have to show them that your startup is addressing a market need and is growing
sustainably. It should be the most detailed pitch of all. Be prepared to speak about
financials, KPIs, and other parameters that are indicative of your growth so far.

You will also meet corporate buyers, media representatives, and networking contacts
when speaking at events or participating in seminars. Ultimately, pitches are about
highlighting your strengths and offering something to the other party. Try to make
it conversational, even when you’re delivering information. Provide case studies and
numbers that back up your claims. A pitch is only reliable when you provide evidence.

Putting yourself in the shoes of the listener is an important step. Try to establish what
they want to know and base your presentation on this premise. If you’re successful,
you’ll deliver a highly personalized and convincing pitch that will provoke the right
response.

Snapshot: FAQs
Accelerators &
Incubators: Why join?
Mentors
Offer industry expertise,
connections, and much more
Corporate Connections
Provide access to relevant
sectors or industries
Pitching
Elevator Pitch
Answer the most important questions
Explain who you are, what you do, and how
it helps your target clients
Conclude with a Unique Selling Proposition
Explain the reason why somebody should be
interested in your project
Engage Further
Provide the opportunity for questions and be
ready to answer honestly
Diversify
Use the pitch at networking events, trade
fairs, meetings, and even on social media
Be persuasive
Fill it with numbers, and showcase your
most relevant skills to be more compelling
Audience
Put yourself in the listeners’ shoes
Establish what they want to know and
base your presentation on this premise
for a more convincing pitch
Know your audience
Make your information and
delivery style more relevant to
the people listening to you
28
Capital
Benefit from equity, board seats, and
other contract terms
Classes
Offer valuable insight which can
supplement your operations
Program Directors & Managers
Provide useful knowledge and
support
5-minute Pitch
Cut to the chase
Focus on your idea, how your business is
different, and your growth strategy
Showcase a Problem
Explain how your idea addresses it, and why
your business is sustainable
Know your business and your industry
Give investors a compelling enough reason
to make them trust your ability
Focus on the details
Plan everything from the way you dress to
the colors you use in your slideshow
Edit
If it doesn’t add to the overall reputation you
want to establish, then remove it
Research if you can
Get in touch with the event organizer or
watch footage of previous editions and
perfect your pitch accordingly
Be prepared to
talk about financials
Know the financial parameters
that indicate returns