In Trends

7 Deadly sins of startup fundraising

7 deadly sins of startup fundraising

Retail in Asia partnered with Limebridge to create a platform of discussion for entrepreneurs, business owners, future startup entrepreneurs or people who are simply interested in one of the buzz words and hot topics in the startup ecosystem: fundraising.

Among the questions, which the platform aimed to answer: how do I find investors? How can I prepare for a solid pitch? What are my various fundraising options that work best for me and how do I structure the terms? How can I raise money with just an idea and a prototype? What are the various crowdfunding platforms? How do I do a successful crowdfunding campaign even without any experience?

SEE ALSO : 100 Start-ups around the Globe Fight for US$140,000 Investment Prize

The event started with a seminar by Yeone Fok, Founder and CEO of SparkRaise, a crowdfunding and network for creators.

Here, the 7 sins Yeonie identified:

1. No auction or market for your fundraise

• if you know that your venture needs funds , it is better to start searching for investors earlier
• make sure that you know where to find investors for your particular project
• there are few types of startup investors : seed, angels, venture capitals, private equity and corporate VCs
• for each stage of your venture, make sure you know who you need to speak to
• fundraising is a continual process, even after successful fundraise, always keep in touch with all the investors who invested or did not invest into your company
• this will keep them on board for the next rounds of fundings

2. Lengthy, jargon-filled pitch deck

• always tailor your pitch deck to your audience
• investors reviews tenths and hundreds of proposals everyday
• most investors know their industry inside and out
• make the presentation concise and to the point
• always prepare appendices slides in case the investor has in-depth questions

3. Not knowing your space inside out

• research the market size
• make the effort to know your competitors and what they are doing
• understand the value chain of the industry
• understanding where your company lands on the value chain
• it is good to always refer to business models such as Porter’s five forces when trying to understand the market

4. Focus on valuation, rather than strategic needs

• startups go to pitch for millions of dollars valuation with nothing more than a business concept
• many start-up founders mistakes successful fund raising for successful business
• many start-up fail at understanding their cash need and their resource allocation
• ultimately, this leads to business failures from over spending or underinvestment
• business planning and financial models are essential to understanding the venture’s financial needs

5. Making unrealistic risk & customer acquisition assumptions

• many start-ups believe that there is high demand for their services and customers will come to their doorsteps
• this is usually not the case and it is important to reflect that in the business planning assumption
• acquiring customers usually require time and marketing investments, both of which can have a significant impact on the cash flow of the business
• startups must be realistic and prudent with their acquisition assumptions to make sure they have enough funds to survive

6. Not researching & not building an investor pipeline

• successful founders are the ones who can continuously find funding to keep their companies afloat
• one mistake founders often make is not keeping in touch with their potential investors
• even if investors decided not to invest, it is wise to keep them up to date with the business’s latest developments
• there is always a possibility where they will invest into future rounds of funding

7. Believing your idea is special

• top mistake founders make is assuming their idea is the first and unique from all the competition
• it is important to look at the idea from the customer’s perspective
• there are always alternatives to solving a customer’s needs or problems
• investors looks at hundreds of proposals every day and have seen numerous ideas solving the same need or problem for customers
• thus, it is important to understand how you can provide BETTER solution than everyone else, rather than seeing yourselves as the first or as unique, because chances are, the investors has already see something similar

SEE ALSO : Why most startups die at 40+ people?

Panel

After that, the Q&A was joined by Kevin Wong, Head of Consulting at Retail in Asia, and Dugarry Chan, currently the Business Development Director of Storefront. Kevin discussed the key elements, which make a pitch interesting to investors, while Dugarry brought in his experience with Storefront, which has been moving from a startup to a platform very well established in Europe and the US and recently landed in Asia and developing quite fast.

Retail in Asia and Limebridge are satisfied of the result and looking forward to announce their next collaboration to co-host events able to engage the entrepreneurial community in Asia.

If you have any questions regarding this topic, please write to our InTelligence Department intelligence@retailinasia.com.

 

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