Fundraising for Startups 101 2
This article is written by Jeremiah Uke, a Contributor Author at Startup Istanbul.
Huw Thomas has a strong background in Innovation in the Energy Industry, his efforts contributed to driving the change in the United Kingdom to renewable energy. He launched several startups in the Energy and Sustainable Food industries as well. Most recently, he raised $3M funding in San Francisco. He has an MBA from the University of Oxford in Entrepreneurship and Venture Capital. He is also a startup coach and offers mentorship to a lot of startups across different programs.
Huw Thomas delivered a live webinar focused on raising funds for startups. He spread his session to cover 4 major points, which were:
1.Equity, Ownership, and Dilution
2.Investment and Incubators
3.What are Investors Looking out for?
4. How to appeal to Investors
After explaining how investment and incubators are interlinked. Huw went on to mention that accelerators and incubators are spread around the world and just about anyone can have access to them. It’s easy to want to go to the biggest incubators of today because they are the biggest. But, as an entrepreneur, if you plan to stay within your country’s market, your best bet would be a local incubator.
Some of the things an incubator will give you includes a workspace, connections, access to a network, they would make you look much more mature than you actually are. They basically take your idea and believe in it. Incubators usually last for about 6 months, with a demo day at the end of it – where you pitch your solution to possible investors, and hope to get funded.
The higher the number of investors you are exposed to the better for you. It’s great to have many of them trying to give you money that very few. Although here, you have to smart from the start with your market validation and all.
What are Investors looking out for?
Looking at 3 frameworks from the Business school at the University of Oxford. The 3 frameworks are:
F I R E ( Fit-Invest-Ride-Exit)
Investors say to themselves “I have $1M, I need to put that somewhere, I have no idea where to start but I should define some startup criteria.” This quote answers the Fit, who is the right person to give the money to?. Invest says “How much is your company worth and how much equity can I take” Ride is the process where they spend time with your company after they have made the investment, this period of time could be up to 4 or 5 years.
Exits, this is where your investor will try to sell the part of your company he/she owns for cash. Investors can also get some money back when the company decides to have an IPO (Initial Public Offering), which basically means opening up to the public market.
In your fit, there are four things your investor is looking out for, they are:
Expertise and network
Logic and Style.