First Time Entrepreneurs/Founders raising funds, Please do Read !
Entrepreneurs, Founders – This is a repost of the Linked In Article I did a couple of months ago!
A quick post for all the first time #founders/#entrepreneurs especially in #ASIA, #MENA, #LATAM markets and who are on LI seeking #angels #investing #seed #preseed and have approached me and/or other investors.
Disclaimer: This my personal view and I have been wrong many times before, so take this with a grain of salt & yes I did not edit it for proper grammar + I was told that hashtags were important in first lines ….
1) Traction/Growth stats are too small a sample size in the beginning – a 3 month dataset is not enough to conclude anything meaningful – unless you are Rocketship.
2) Extend the POC/(what I call Pre-Beta/Beta stage) time – ie runway to see what you can do bootstrapping yourself & are your growth metrics at 6-8 months as what you had expected in month 3-4? Rocketships ignore…data will force your hand.
3) Try raising friends & family (F&F) round first – at this point, you have folks closest to you believing in your app idea/biz model/product (hence investing with you) + your first customers willing to give you no-holds feedback.
4) Or if you are a Rocketship – go for named investors and institutional ones. Start local, national but don’t constrain yourself in your approach going Global. (Avoid Brokers/Advisors/Freeloading Mentors) looking to make introductions with funds & getting you funded – in return for monetary compensation or even worse a stake post money – this applies to non-rocketships)
4) Sustain this #round as long as you can but start planning 3-5 months in advance of your planned Seed Round (btw let the F&F know that you will look to raise soon if you get traction – they can exit or participate or dilute). Rocketships ignore.
5) Keep your#team size small till you get Seed Round locked try to keep it optimal after that.This is critical but most overlooked aspect by entrepreneurs.
Unrelated Side note: For all those using #AWS – 4gigs of RAM minimum and 8 cores will keep you humming in your initial stages.
6) Break up your Ask in stages – (friends & family) – (Seed) -(A) -(B) – no one goes from Seed to IPO in a straight line irrespective of what the MSM (look up MSM on social media especially #twitter for what MSM stands for) wants you to believe in overnight success stories. Side note – References to Unicorns, Decacorns in your deck don’t help.
7) Tie your revenue milestones to expenses – break #Capex (will be surprised if you have that big, #Opex yes understood) so it becomes easy to see what the plan vs commit vs forecast vs actual numbers are ( h/t to the person who actually shared this on the net first, apologise that I don’t have the reference here – if someone could point that out, will update the post) – in short how are you trending in the financial/growth metrics – yes the sparklines graph in that #GSheet cell looks ugly but it is ok.
8) Know your metrics(growth/rev/cac/expenses/*cap table) by heart but try to know everything about your target customer/markets – (everything – maximum data points on your target customer). *this becomes more important for Rocketships.
For ex: TAM shouldn’t be entire population of India & cell phone penetration percentage metric. You are building an app. Smartphone market is much smaller + paying customers (TAM gets smaller) and yes Android rocks in that part of the world so no need for an iOS app developer at this stage in time. (ref to point #5)
9) Keep your term sheet simple. Be transparent and ask the investors to showcase the same transparency. And yes those #convertible notes signed on early do matter.
10) Competition will spring up before you know it – have a plan to face that scenario – (am serious) this where all PPT decks doing SWOT analysis pre-raise fail because no one plans or is thinks that the competition will hit you fast. This is true for Rocketships..
You will get multiple rejections before you get an investor on board, don’t lose confidence, work harder and keep sending progress/or lack of progress updates to the investors (don’t spam them but only update with their permission). Build relationships that are part of your entrepreneurial journey that will help you, guide you & influence you in your successes and stand with you when you face failure.
No shame in failing, success takes time, for a few it takes months to years, for some of us a few years & still counting Keep the consulting gig, freelance assignment, day job if you have to but most importantly keep the hustle going!
Hope this helps folks, if it does please share/comment, if not hit me up with comments, happy to engage/enrich the experience for everyone’s benefit & please do share.