Rayn Ong is an angel investor, a Principal at Archangel VC, and a Blackbird Giants mentor. He recently hosted an event for startup questions in a reddit-style AMA - you can take a look here to see how it all played out.
Our startup coach Pete Lead was in attendance, and he has put together a series of bite-sized insights for you to digest below!
1. How to validate whether an idea is worth pursuing.
“Try to sell it, articulate the ROI to your future paying customers.
E.g., pay me $100 a month, the product will save you at least 10 hour a month (at $100 an hour, that’s $1000 saving), a 10x ROI.
It can be:
1.Time/money saved (bottom line)
2. More sales and revenue (top line), or:
3. Risk avoidance (eg a product recall that cost you $25k)”
2. How you tell your pre-seed revenue story.
"How will the first revenue happen and what’s the ROI to the person paying you?"
Don’t do “The classic top down story: “This is a $10 trillion market, we only need to capture 1% of it.”
“Instead, show how you sign your first 10 customers, who else is in the pipeline, tell the bottom up story. Ideally make up a believable $1m revenue story.”
"I usually focus on customer’s reaction."
3. Have lots of potential channels to market early on?
"It is worthwhile to explore more surface area in the early stages, but at some point you would probably want to hit the most promising channel hard.”
80/20 rule usually applies.
4. What does Rayn look for in a founder?
"Can they build it? Can they sell it? or the Two Shits Principle: can they get shit done, and why do they give a shit."
"Deep domain understanding and a plan to navigate to $$$. Clearly articulated so that I can see the $$$ too (before it actually happens)"
5. Is he excited about AI and other emerging tech?
“Founders are more productive with the AI tools. So we are observing more progressed companies hitting the capital market. Revenue also happens much faster. But if the company is solving something very obvious then competition can be fierce and retention is usually a concern.
Plus price war leads to a race to the bottom. I generally prefer the non obvious problem, so founders have time to get it right.”
"Boring, non obvious, big ACV. I usually make money on those."
“When we launch the Archangel 2022 fund, there was no much mention of AI in our fundraising doc. And then ChatGPT happened. I follow the market disruption, I follow good operators and I follow the money. I rarely try to predict. At the moment, workflow and productivity AI in spaces that traditionally have high cost or make big money is where the rage is.”