Fundraising

A profitable business needs to scale up, what to do next?

Anonymous

September 11th, 2015

I am a serial entrepreneur. I was able to work my way up to get some little successful with my team in last few startup. I have never successfully raise a fund in the past, although I have very few angel resource and connection in my hand. From this year Apr, we have a launched a telecom product, it's a customer based startup. We were able to quickly ramp up with monthly 20+k revenue, user retention rate is 98% over 8 weeks period, 200%+ month to month growth. All the metrics looks amazing so far. In order to scale to the next phase, unfortunately we need to go to get certain license and compliance, which requires company cash assets. It's not a small amount, which we usually can get from loan or other way.
I am wondering if anyone can provide me some suggestion. I am afraid it will take so much time to first connect them since I don't have connections. I have also thought about going to startup competition to get attention from investors. Is this a good option?
My cofounders and team has already been very lean, we reinvest all profits back to the business. It's just very hard to scale to 6 figure revenue without raising funds. 

Nishant . Co-Founder LIFTOFF Ventures || Investor VYANA Scientific || Mentor & Strategic Ideator

September 12th, 2015

Isn't it an issue many a founders face and usually don't know when and how the funds will be needed.

I have either been a part of or personally had success raising funds for my previous startups of which one failed and one had a small exit. 

Our experience taught us a few important lessons. 

  • Never put a time estimate on fund raising or closing critical to business deals. These depend on a lot of factors & environment and deadline will fly past you
  • Calculations based on performance and future estimates should never be optimistic as we usually make them quite optimistic
  • Use network to your benefit as referrals help more than what people usually consider
  • Fund raising is a continuos process which will need dedicated time and effort from founders
  • Don't expect a really good idea to gather steam quickly. Remember what we think as founders is not really what investors think as well. Both harbor starkly different goals and its frustrating for them to work with each other
  • Protect your interest and rights with all your might. Though there may be situations where you need to decide between keeping control or surviving
  • Hire a proper lawyer for yourself. Remember the Angels lawyers is theirs, VCs lawyer this theirs and Funds lawyer is theirs....where's your lawyer

Solution assuming the fund required is significant to gather VC attention:

  • Slow down make certain you stretch your cash if cash flow is short of full support
  • Initiate dedicated fund raising efforts and tap all options. If the numbers are supportive, you may have an early solution
  • Go back to initial angels and ask them for referrals, interest in future participations etc
  • Bank on PR to help as well as the network, including your startup network
  • Identify companies in similar domain companies funded by VCs. Approach these VCs first as theres a good chance for them to be interested
  • Though you have not specified the geography you are in. Some countries have dedicated government bodies promoting startups. Try them out
  • Joining an accellerator program is a great option to look at
  • If you have a smart lawyer, he may have contacts to introduce you. Tap it
  • Strategic partnerships with others in the same domain is another way to expand quickly. If yours is business model which makes sense for an established group a couple of meetings and strategic investments make be possible. Note large firms move slowly be patient


Startups go through a lot of pain through the initial years. Though everyone will tell you to ride the storm and success will await. The smart one's also keep in mind that strategic exit or closure does not always mean defeat. Most top businesses actually evolved out of very different models initially.

Wish you luck with the endeavor.

David Still Founder of Start-ups, Entrepreneur, Financier and Advisor

September 12th, 2015

You may want to look into FindVenture and other telecom specialized placement bankers. Very hard to break into a telecom vc world on your own without a banker or intermediary. It will likely be costly.


"Telecommunications Venture...

http://www.findventure.com/telecom-venture-capital/

Along with technology, telecommunications has been integral to business, culture, economic development,and worldwide communication. Given the demand of the industry and its immediate link to technology, entrepreneur shave the ability to aid in opening new market, categories, and solutions across the world through the use of telecom venture capital firms.Some of the specific focuses of telecommunications venture capital firms include network, mobile technologies, digital media, telecom services,Internet, and broadcasting.

Not only is this industry vital to the United States, but it has also played a large role in globalization. Telecommunications financing also aids in driving economic development and growth potential in other countries.Worldwide revenue of the telecommunications industry was more than $3 trillion and that is only expected to grow over the next few years.Typical investments by telecom venture capital companies range from the seed stage to later stages including M&A, buyouts, and growth equity.The demand of on-the-go information and continuous communication is met and enhanced through telecommunications.

FindVenture.com can help you get connected to telecommunications private equity and ultimately get funded. "http://www.findventure.com/bd/sign-up/


It took me 18 months and $110 thousand of expenses (no salary) to raise $100 million startup capital without a banker.


PS Are you paying salaries? If not, then impute them and see if you are still profitable. Important in terms of you subject header to investors.

Steve Owens

September 11th, 2015

99% of all biz are not fundable - at least not from a VC.  I would have to assume your biz would be in the 99%.  I have raised money 3 times.  Last time it took a year of full time work, and maybe $25K in expenses.

There are many ways to bootstrap a biz - have you considered any of these methods?

Pranay Sanghavi

September 20th, 2016

FindVenture.com can help you get connected to telecommunications private equity and ultimately get funded. "http://www.findventure.com/bd/sign-up/

Site is down

Golden Equity LENDER

September 20th, 2016