Last week, we had the opportunity to contribute at the ‘Elevate Your Fundraising’ webinar organised by Singapore-based corporate secretarial and accounting firm, Crystal Clear, alongside a promising panel of industry experts. Here at Aspire, we are all about empowering startups by providing seamless solutions and valuable resources to elevate the way you run your business.
With the wealth of information and insights that we’ve gathered during the session, it only felt right to share it with all of you.
If you’re a startup founder looking to kickstart your fundraising journey, here are some of the hard-hitting questions you should be asking yourself, according to the experts themselves.
1. Should every company get started with fundraising?
To fundraise or not to fundraise — that is the ultimate question. For anyone looking to scale their startup to greater heights, raising funds just seems like the next natural step. But to accurately find out if fundraising is the right path for you, take a good look at your business model and the nature of your business.
Carta’s Head of Business Development and Sales, Cody Anderson emphasises the importance of having clarity about what your business is all about and what you’re trying to achieve, especially in the earlier stages.
In today’s day and age, some of the industries attracting the most venture capital include software, biotechnology, and anything that has an upfront demand for research and development. Such sectors require a significant amount of capital during the pre-revenue phase, which explains the need for early-stage funding. On the other hand, lifestyle businesses that operate more methodically and aren’t looking to accelerate their business can afford to take it slow and consider bootstrapping instead.
After assessing your business model and future goals, you can then determine whether it is absolutely necessary to go down the road to fundraising.
2. Who should you raise funds from?
Our very own Aspire Regional Business Development Lead, Brenda Shee, explains how government grants should be the initial option for founders before diving straight into external investment sources. With a pro-business environment that highly embraces startup culture, Singapore offers a wide range of grants that can help you accelerate your business growth without giving up equity in return.
However, the beauty in seeking help from high-funding investors is the knowledge and expertise that it comes along with. Fintech Angel Operator’s Partnership Lead, Vinay Palathinkal mentioned that strategic alignment between founder and investor can be extremely useful as you grow your business. “Without industry-specific knowledge, it’s going to be hard to scale”. When you find investors with relevant experience in your industry, not only will you be able to tap into their network and learn from them, but it also gives future investors a higher level of confidence as you have someone that is recognised.
From government grants, angel inventors, to venture capital firms, the options are endless. To help you decide whom you should raise funds from, take a closer look at your business needs and goals.
3. What do founders need to do before starting a fundraising campaign?
Besides your pitch decks and financial documents, there’s more that goes into the preparation process before starting a fundraising campaign. “I don’t encourage founders to blindly come to angel investors without having done enough research first”, Vinay explains. He also mentioned how having a basic awareness of what your investors are looking for and what you have to offer is crucial before raising a round.
Founders often prioritise ramping up this process, but you have to understand your business from the inside and out first. Here are a few aspects to consider when preparing:
- What am I planning to do with the funds post-fundraising?
- Who are my key hires?
- What are the best KPIs and metrics for my business? What would be the best indication of growth that I can show to potential investors?
- Am I in a good headspace to commit to the fundraising process?
- How will I be able to manage investor expectations after securing funding?
By having a clear idea of what your goals are for your startup, how you intend to achieve them, and how you will be using the funds raised, this shows investors that you understand your business like the back of your hand, which would only give them more confidence in investing in you.
“You have to have a reason for why you want to raise with them. If you want advice, ask for money. If you want money, ask for advice.” — Cody Anderson, Head of BD and Sales, Carta
4. How do I manage investor expectations?
Managing investor expectations is a full-time job; this is something you’ll have to work on before, during, and after you’ve received the funding. Unlike a strictly transactional business loan, fundraising is the continual management of those expectations.
Constantly keeping your investors in the loop is one of the most effective ways to manage their expectations. Once you have signed an agreement, your business model and plan needs to be well-communicated and thorough to allow both parties to be strategically aligned.
Even if you encounter roadblocks along the way, be honest about the challenges as well. There are bound to be emotional ups and downs in the entrepreneurial roller coaster so you have to be clear and level-headed. Investors may be your primary source for money, but they also want you to grow at the same time.
5. How do I manage my funds post-fundraising?
According to Brenda, one of the most common areas that founders tend to neglect after raising a round is properly handling their funds. Even before you receive the first round of funds, how you intend to handle and store your funds should always be at the forefront of your mind when starting the fundraising process.
Getting your corporate structure and business account settled should be just as important as fundraising itself. Take the time to find the account with the best rates and be aware of potential blockers like FX transfers and fees.
Ultimately, you worked so hard to get the cheques in and should start thinking about where the money would be going.
Get started on fundraising with confidence
After all is said and done, founders need to be driven by something that they want to make or see as a change. Want to convince potential investors that a future with your company is exciting and promising? It first needs to be exciting to you. Have a clear understanding of what you’re trying to achieve, know your purpose, and be intentional.
Now all that’s left to do is polish your pitch to perfection, put your networking skills to the test, and get to work. All the best in your fundraising journey!
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