The CEO of Choice Accelerator advocates for a distinctive approach to nurturing entrepreneurial ventures. Rather than being swayed by flashy presentations, she emphasizes the critical role of founders' knowledge and execution in transforming ideas into successfully raising funds for businesses.

In Cambodia's burgeoning startup landscape, Jennifer Lin's insights provide a refreshing perspective, shedding light on what truly matters when evaluating a startup's potential. Furthermore, she underscores the significance of founders safeguarding their interests during equity investments, offering crucial guidance on capitalization tables and legal requirements.

Founders' Knowledge and Idea Execution

Lin, CEO of Choice Accelerator, emphasized the significance of founders' knowledge and idea execution in building successful startups.

She said it is a misconception that founders need to excel in presentations and stressed the importance of understanding the business and being able to answer crucial questions.

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According to Lin, many founders in Cambodia, particularly those from an IT background, may lack the confidence or skills to deliver impressive presentations. However, she believes that this does not necessarily hinder their ability to run a successful business.

"I actually don't really care if the founders give me a fancy presentation. Not all the businesses will be done the best by a sales type of founder."

Lin highlights that a flashy presentation is not the most important factor in evaluating a startup's potential success.

Lin acknowledges that IT-focused founders often excel in their technical knowledge and product creation, and they can thrive with the right partners and team members.

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Unlocking Key Factors to Raise Funds from Investors

She expressed her different approach compared to other investors and programs in Cambodia. Rather than focusing on polished presentations, she prioritizes in-depth discussions and asks specific questions to gauge a founder’s understanding of their business.

"For me, actually, I want to know from the founders," Lin said, expressing the importance of asking the right questions to uncover a founder’s understanding and vision for their business.

She believes that founders who possess a strong understanding of their business and can effectively address investors' questions have a higher chance of success. Presentation skills are not the sole determining factor in evaluating a startup's potential.

"I don't care if you can do a fancy presentation but if you know you don't have an idea about how to grow your business, you will not be able to answer my questions," Lin added.

Lin's experience as an investor allows her to identify the information she needs and assess founders' vision for the future of their startups. She typically engages in Q&A sessions lasting approximately 1.5 to two hours, instead of expecting a flawless presentation.

She believes that founders who lack a solid grasp of their own business, or need help to articulate their plans, may not be suitable investment candidates.

"From my perspective, if you’re a good founder, you don't need to worry too much about presentation," Lin said, reassuring founders that being a good founder is more about having a strong understanding of the business and execution, rather than focusing excessively on presentation skills.

Choice Accelerator CEO, Jennifer Lin (Kiripost/Siv Channa)

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Share Insights on Startup Presentations

According to Lin, founders should prioritize providing concrete numbers and data during their pitch. She emphasized the importance of giving investors a clear understanding of the company's growth and performance through quantifiable metrics.

Lin stated, "If you tell me your business grows very well, then I don't really know how well this is. There's no clear number for me to catch this concept. But if you told me this year you grew your revenue compared to last year, at the same time by 200 percent, then I know your business grew two times compared to last year. Try to describe everything with real numbers."

Lin also highlighted the importance of acknowledging competition. Rather than claiming to be the only player in the market, founders should identify and analyze similar companies operating in their field.

Lin stated,

"It's not a good idea to tell people that you are the only one in the market. You need to tell investors who the other companies are, even if they are not doing the exact same thing. Explain why your solution is more competitive than others."

Addressing Competition and Identifying Unique Products

Lin emphasized the significance of addressing competition and clearly identifying unique products or services in startup presentations. Lin's insights shed light on the key elements that founders should consider when pitching their businesses to potential investors.

Founders need to provide a clear analysis of the market they are in, including potential and current competitors. This analysis helps investors gauge the startup's competitiveness and strategic thinking, she added.

Lin expressed concern about founders who overlook potential threats and competitors, as it raises doubts about their awareness and preparedness.

She said, "You need to give me a clear analysis about the market you are in; the potential or current competitors you have. Then I know if you are actually the most competitive. If you don't know yourself, you don't pay attention to potential threats. If that's the case, I will not have that much confidence in this kind of founder or founding teams."

Moreover, founders should clearly articulate their unique product or service and explain why people would prefer their offering over competitors.

Lin encouraged founders to address questions such as whether there will be other companies from other countries coming to Cambodia to compete, and if so, how the startup can compete back.

She also highlighted the possibility of big corporations in Cambodia entering the same business, and advised founders to consider how they would defend themselves or potentially cooperate with these businesses.

The CEO emphasized that founders should pay attention to potential competition and threats. By accommodating these elements in their presentations, founders can deliver a more compelling pitch.

Lin concluded,"There are several things that I hope all founders can try to pay attention to. If you accommodate these elements in your presentation, I think it will be a better presentation."

Common Pitching Mistakes

She added the founders in Cambodia often make a significant mistake in their pitching approach - failing to understand the expectations of equity investors.

Many founders mistakenly focus on presenting their startups as superior to others, as if they were still participating in a competition. However, this mindset does not align with the long-term goals and priorities of equity investors.

Lin explains, "We are an equity investor, not an accelerator program or a NGO. We are not in the business of giving grand prizes or funding short-term initiatives."

She highlights that many startups in Cambodia have participated in numerous programs and competitions in search of accolades and prizes. Consequently, founders tend to focus on persuading judges or investors that they are the best among their peers in a given program.

While acknowledging the importance of demonstrating a better business model or making a positive impact on society, Lin emphasizes that equity investors have a different perspective.

As long-term shareholders, they are primarily interested in evaluating a company's potential for sustainable growth and profitability over an extended period.

“Investors want to understand how a startup can evolve and expand over the next three, five, 10, or even 20 years,” she added. "The most important thing is how can you become profitable and how can you grow into a much bigger stage? This kind of mentality is totally different from when you join a competition."

Lin advises founders to prioritize discussing their own company, market analysis, and growth strategy when pitching to equity investors. Instead of trying to prove superiority over other startups, founders should focus on showcasing their business's unique value proposition and long-term potential.

The CEO reiterates that equity investors are primarily concerned with the company's ability to generate returns on their investment. While showcasing impact is valuable, profitability and scalability remain the most critical factors in an investor's decision-making process.

Lin added that equity investors are not focused on giving prizes or donations. Their main objective is to make sound investment decisions based on a company's profitability potential.

Pay Attention to the Cap Table and Majority Shareholding

In the discussion, Lin emphasized the importance of legal protection for startup founders. She highlighted key considerations to safeguard the interests of founders while welcoming equity investors, capitalization tables, and navigating the complexities of legal issues.

One crucial aspect, according to Lin, is for founders to retain majority shares of their company, ensuring they maintain control over decision-making processes. She advised founders to be cautious about relinquishing control of decision-making power as it can impact the direction and future of their company.

“For legal issues, founders should try to protect themselves by not giving up the majority shares of their company. At least they shouldn't lose the decision-making power, the controlling decision-making power of their company," Lin said.

A second crucial aspect, according to Lin, is that founders need to pay attention to the capital structure of a company, particularly the capitalization table, as it plays a crucial role in attracting international institutional investors.

Lin stated, "For international institutional investors, if the cap table is not correct then they will not consider investing in you." She shared an example of a Cambodian startup she recently interacted with where the founders only held 20 percent of the company, while the remaining 80 percent belonged to local investors.

Lin explained that such a structure undermines founders' decision-making power and makes it challenging for them to effectively pitch their company. In this case, the person holding 80 percent of the company should be the one pitching to investors, as they are the true owners.

Lin highlighted that this type of capital structure, where founders do not hold a majority share, is a deal breaker for her and many other international investors.

She believes it significantly reduces founders' control over companies and may deter future fundraising from institutional investors.

While some founders may prefer this structure to gain resources from corporate investors or potential acquisition, Lin urged founders to carefully consider the implications if they intend to continue raising funds and attract institutional investors.

Lin acknowledges that every founder has their own vision and decision-making process for their company's future. However, she advises them to evaluate whether maintaining control and raising funds from institutional investors aligns with their long-term goals.

“If founders want to continue raising money and secure investments from institutional investors, a capital structure where the founding team holds a majority share and maintains decision-making control is crucial,” Lin said.

She also stressed the significance of adhering to legal requirements. While acknowledging the challenges associated with startup registration due to high fees, she emphasized the necessity of proper registration when welcoming equity investors.

"Try to make everything legal with documents. I know it’s very hard for startups to register as a company because the fee that you have to pay for registration and maintenance is very high. But since you are welcoming an equity investor, you need to do registration according to the law," she said.

By legally registering a company and formalizing investment agreements through contracts, founders can establish a basic level of protection.

Legal Issues

To avoid potential legal issues, Lin proposed seeking advice from trusted individuals. Founders can reach out to startup founder friends who have previously raised funding or have knowledge of accelerator programs and investment opportunities.

Sharing the terms received from angel investors or potential investors with trusted individuals can provide valuable perspectives and insights. Lin encouraged founders to consult with those they trust to seek opinions on the fairness and viability of the offers received.

Lin further offered her own support to founders, stating that while she may not be able to assist everyone, founders who know her can share their offers for her input. By leveraging her experience and expertise, they can also gain insights and avoid potential disadvantages.

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