Fund raising refers to all processes involved in getting capital some others to start and or run a business.
In launching an idea most start with cash from savings or from FFF (stands for friends family and fools ).
Your first capital outside savings is called preseed or seed fund. Then series a, b, c to z are the capital that come when your service has built some market acceptance or reputable business model. The last lap of funding is IPO (Initial Public Offering).
How Much Should You Raise?
Ideally you should raise as much as is needed to reach profitability and never have to raise funds again. In determining how much should be raised things to consider are progress, credibility with investors and dilution.
The amount you are asking for must be tied to a believable plan that adds to your credibility. It is wise to create multiple plans with assumption of different amounts raised.
Stages of Fundraising.
1. Build a solid team: this is a team of four to five people with the mix of business and technical talents. You can look outside your network and look for an experienced team. Investors invest in people not the idea itself.
2. Create a pitch deck: this is a very concise powerpoint presentation that tells your vision for the business and the strategy for achievement. It should be continually refined as you get feedback from investors. Use less words and more graphics, chats and screenshots. Below is a template for a pitch:
1. Your company / Logo / Tag Line
2. Your Vision – Your most expansive take on why your new company exists.
3. The Problem – What are you solving for the customer–where is their pain?
4. The Customer – Who are they and perhaps how will you reach them?
5. The Solution – What you have created and why now is the right time.
6. The (huge) Market you are addressing – Total Available Market (TAM) >$1B if possible. Include the most persuasive evidence you have that this is real.
7. Market Landscape – including competition, macro trends, etc. Is there any insight you have that others do not?
8. Current Traction – list key stats / plans for scaling and future customer acquisition.
9. Business model – how users translate to revenue. Actuals, plans, hopes.
10. Team – who you are, where you come from and why you have what it takes to succeed. Pics and bios okay. Specify roles.
11. Summary – 3-5 key takeaways (market size, key product insight, traction)
12. Fundraising – Include what you have already raised and what you are planning to raise now. Any financial projections may go here as well. You can optionally include a summary product roadmap (6 quarters max) indicating what an investment buys.
What are the Rules
1. Get over it as soon as possible but don’t stop raising funds too soon.
2. Once someone says yes don’t delay. Get documents signed and get the money in the bank as soon as possible.
3. Always hustle for leads.
4. Hold yourself AND your team to the highest ethical standard. A bad reputation is difficult to repair.
5. Stay organised.
6. Have a thick skin but never be arrogant. Learn to strike the right balance between confidence and humility.
1. How does a makeup artist or barber raise funds?
– Find an angel investor. This could be just anyone with some cash around your immediate community.
2. How do I raise funds for a software I developed and still protect it from being stolen?
– Ask for a non-disclosure agreement between you and the investors. This is useful if a lawsuit becomes necessary. Also, share only surface parts of the software and don’t go into details.
3. What of startups requiring millions to run?
– Get an MVP (Minimum Viable Product). This is a proof of concept to get funds. Also remember, you don’t need a lot to do a lot.
About the Guest.
Joel Amawhe of myPadi.ng
He started myPadi (formerly HostelsVilla and Studacom) in Ozoro, Delta State to make school stress-free starting with connecting students & youth corpers with vetted, short and long term housing in Nigeria. myPadi which is a little over a year old, is one of Ventures Platform’s Portfolio companies, has been awarded best e-housing startup of the year by NITDA, won $5K in grant at Nigeria Economic Summit and was of the 10 companies that represented Nigeria at GITEX2017 in Dubai.