Raising funds for your business not rocket science
Regardless of our various ambitions, clock hasn’t stop ticking. The first half of the year is gradually rolling out.
Yeah, it has been a wonderful experience for some while another set of wannabe founders are finding it difficult to settle score with those ideas that are giving them sleepless night.
Just as many startups are seeking out funding, that is how many seed capital, private equity funds and Venture Capitalists are looking for where to place their funds.
Why? It cost money to keep money. But it is more expensive to lose money.
It is not everybody that has bankable ideas, and some ideas are whack really and truly. Many prospective founders have done millions of pitches and yet nothing is forthcoming. Hey, hang on.
I am privy to some issues that barricade many funds seekers from accessing such from investors.
One thing people don’t understand about money is that it goes to where it is treated well.
You just have to understand the nuances. It is difficult to trust funds to some people, then heavy scrutiny has to be in place. It is not personal. It is commercial.
How do I raise fund?
To raise funds for an idea is as risky as throwing money in the air in an open field.
However, the narrative that underscores the budding technology sector in Nigeria and across Africa is fund raising.
Meanwhile, not many have slight idea what it takes to do this successfully. Funds are everywhere and few are accessing it.
You too can but you have to know the rule.
Funding is important. Africa rising narrative won’t get stronger without some heavy investment in startup.
Though growing, private equity investment in Africa still lags behind compare with what is obtainable elsewhere.
That doesn’t mean Africa is not getting closer, albeit slowly. Though, funds are seeking good ventures to invest, few have really pass the viability test.
If you are operating in the tech industry, trust me there are many funds set up to take care of your financing needs.
There are many places to look for seed funds. Early stage investment is highly risky things to do. But there are seed funds here and there. For example, Microtraction.
Microtraction: One company, many portfolios:
Microtraction was set up purposely to invest in startup businesses at various stages, and the firm says it is sector agnostic.
The firm invests in Africa’s most remarkable teams with technical founders at the earliest stage of their venture.
If you are really seeking out financing for your startup in this sector of focus, the first requirement is that your team must be remarkable to gain Microtraction attention.
Most private equity firms and Venture Capital have this as their basic requirement.
If you are a one-man show, it is very unlikely that you will be able to raise funds almost from nowhere.
You are sum of your parts. So, there is no synergy really. Either for success or failure, it would get to a stage that you would be overwhelmed with what is before you.
First rule, you can’t go alone if you really need someone to bet on you.
There are numbers of stage 1 funds you can access. It depends on the quality of what you are putting forward.
Wait, maybe you need to know this. The people you are seeking to access their wallets are not charity organisations.
Be scared if your proposal lacks detail, they have eagle eyes for commercial worth of every idea you are putting on the table.
Microtraction investment in startup comes handy.
The firm invests $15,000 for 7.5% equity stake, followed by an additional $50,000 convertible note at a $1 million valuation cap in companies that show significant progress after our initial investment.
The firm seeks to identify best early-stage, growth-driven technology startups with the potential to become billion dollar companies, then it places funds.
The rule is, you would need strong business plan that details how you intend to commercialise the idea.
The amount that is needed now and forecast how the numbers would panned out. Products, market, and numbers are important.
What you are selling, how and for who? You must be willing to address how you are willing to compete.
Don’t play Blue Ocean Strategy, now
Don’t play this card when you are pitching. Nobody would believe you. So, don’t say you have Blue ocean strategy yet, you would shoot yourself at the feet.
Emphasise willingness to compete with existing or new entrants.
Be sure how the product modifications would work or how it could be further explored as someone somewhere is watching how to gain such unfair advantage –at the expense of your creative intelligence.
Microtraction works closely with the startups, providing them with pre-seed funding, professional and advisory services.
It gets startups to a point where they are impressive enough to raise more funding or join world class accelerators, then introduce startups to later stage investors and help them navigate the process of raising a larger round of funding
This seems a lot and you can key into this without hassles if you really understand why Microtraction is in business.
Turn the table around first and ask if I were Microtraction, knowing fully well the kind of risk on the table, how do I investment the funds at my disposal?
Those things that you often neglect count when you are on the hot seat, pitching those that have the funds you seek.
Raising funds for your business not rocket science @LSintelligence Associates