There are a lot of articles about fundraising and somehow everyone knows how to do it but what are the real skills? Our CEO & Co-Founder Phong Dao will give you some insights into his experience.
People think they have great ideas and money will just come by itself. And this is what I also thought when I had my idea for my first startup in 2014. I founded “miwalk” with a colleague of mine in 2015 and it was a fun ride for sure.
Great idea, some users, partners on the platform and an invite for #DHDL – so we decided to raise some funds and planned to work full-time for our idea.
What I did not know during that time is that only 0.05%* of startups raise venture capital. I contacted two business angels and met with both of them but surprisingly I did not get the funding that I was looking for. Was it not the right timing? Was the product not good enough? Have the numbers not been enough? And if anyone tells you it is easy, they are wrong.
After two successful funding rounds for ive.one from Agora Innovation, a regulated investment and issuing platform for digital assets on blockchain, I gained quite an experience and this is what I think it takes to close a successful funding round.
Fundraising is a process and in most cases, it takes between 4-6 months until you can close it. Especially due to the high bureaucracy in some countries where you as a startup have no influence. Do not rush and think you will pitch and have a deal next week because in, the end, an investor puts his money not only in your idea but in the people behind it. So it is only legit that investors will take their time. You need to negotiate and always be humble that a new chance could arise for your startup.
Venture capitalist and business angels are people. Of course, they have a little bit of funds to spend but you should not look at them as investors. People do business with people and not with companies – so behave like that. Try to get to know your counterpart and build up a relationship because in the end if they invest, they will invest in you and your team because they trust that you can bring this product to market.
If you want to found a startup, try to find like-minded people with completely different skill-sets. As a solo founder, I would never be where I am now since investors prefer to invest in teams – and this team should be able to execute the idea. Ask yourself if you are a great developer, can you also do marketing, sales, business development, and fundraising? If you a marketer, can you develop the product? Try to build a founder team that has business and technical know-how to develop an MVP with your own money. Investors will appreciate it.
If an investor says it is too early it mostly means that something else does not fit. In general, the window of opportunity nowadays gets smaller because a lot of people have great ideas and investors have 1000 pitch decks in their mail account. So if an investor declines the possibility to invest in your product, do not see it negative and try to get some feedback on why they do not want to invest. There is a reason that they refuse and you need to know it because otherwise, you cannot elevate your pitch. So get feedback and do it better next time.
Stick to your idea
Sometimes as a founder you think that your product is currently not good enough even if you know it is better than your competition. Rejection is something people need to learn to accept and if people do not like your idea, you still have to believe in it. It is easy to throw the white flag but it is much more satisfied if you raise funds for something where you stand 100% behind it. Do not just throw away your idea or change it immediately after negative feedback.
The funding process is a “give and take” process between you and your new potential partner (investor). Of course, you believe that your product has a pre-money valuation of xxx – but what is if you are wrong? Are you really wrong? Is the investor wrong? No, it is all about finding the right terms so that you both as a founder and the investor are satisfied. If your product at the end will be successful, no one will complain, right?