Raising Capital for your Business

How to Reach the Right Investors

As an entrepreneur, you may have the investment teaser deck, and know the profile of investors you are looking for but you may still struggle to source the investor. Sourcing investors is one of the most critical parts of securing funding from an investor.  In this article, I will share with your some tips on where to source the right investors that will provide you with the resources to grow a sustainable and scalable business: Join incubator and accelerator programs as this gives you and your venture visibility Join Angel networks and communities Be a part of support organizations’ communities Join associations that relate to your industry Reach out to Universities with strong business or entrepreneurial programs Reach out to your current network and see which connections they have  Use Linkedin to search for investors and view their profiles Network with other investors that might not be right for you, as they can connect you to others Research your competitors and identify who their investors are  Create a profile on online crowdfunding or investment profiles Attend events and conferences related to your sector of focus Host events Identify where the ecosystem congregates and be there Put yourself and your skills out there by being a mentor to other new entrepreneurs With this, you can create an investor target list where you highlight their contact details, past investments, connections you have in common if applicable, where they are based, where you found them, why they are a good fit for you, and any other relevant information. Remember that the role of your investor is to provide the expertise, network, and investment to help make your business sustainable and scalable. Contact Versa Research your trusted data, research & consulting partner!   Read Also:  How to Select the Right Investors

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How to Leverage Story Telling for Your Business Pitch

There are a number of reasons a business needs investments, these investments could be in the pre-seed, Series A or B and regardless of whatever stage the business is operating, the major reason for seeking investor’s funding is usually for expansion purposes. This expansion could be in the line of products or the need to serve more customers in their growing numbers due to exponential demands. Why Storytelling? Story telling has been found to be the underlying magic when pitching to investors. Effective story telling has to be genuine and linked to the WHY of the business i.e. the challenge the founder(s) were trying to mitigate when they set up. It also has to be told with clarity backed up with research-based statistics on prospective customers that are in need of such solutions. Highlighted below are the key elements of a Pitch Deck The Pitch Structure The pitch deck structure while different in the pieces put together as templates by different businesses, should still have the most essential ingredients and answer the potential investor’s questions. These items in a pitch deck should be on each slide Cover Page The cover page is a basic design that captures what the organization does. Usually the logo of the organization and the tag line, which serve as their value proposition to clients. The cover page should be very simple in design and text. Introduction The introduction is the executive summary of the pitch deck. All the parts in a pitch deck should follow a simple rule “less is more”. The Pitch deck should have very limited words and should be clear. Problem State the problem in a very clear and concise manner. This slide should capture in bullet points the problem your business is trying to solve. Solution The solution slides need to state the function of your product or service as it addresses the problem you have stated. Try not to get into mentioning features as what is important here is how your product will benefit customers. Product Demo If you are making a physical presentation, your product demo should be in a video of 30 seconds or less about how your product or service functions to provide the solution. If you do not have a video, then a pictorial view of images can also be used to represent this. Market Size You can adopt two approaches. You either take the top-down or bottom-up approach. The top-down approach is to find out the size of the market and estimate how much of that size you think you can capture. I think the top-down helps to be more realistic as what you hope to capture can either be expressed in years or in the lifetime of the business. Business Model What would your business model be? Are your products going to sell for a particular price? Would your customers have to subscribe to it weekly, monthly, or daily? This is what your business model represents. Some social media platform runs on a freemium model where users do not pay to use such platforms; however, the platform then makes money from advertisers wanting to gain visibility from this number of users for their products or services. Competition List your competitors whether they are direct or indirect and mention how you are better than them. For example, the indirect competitor for a carbonated drink is water and most bottling companies have succeeded in making their products a unique alternative to water by serving a refreshing taste. Mention here what makes you stand out. Go-to-Market When you launch a new product, it is necessary that a market plan exists; it helps to answer the question of how you would acquire customers. What steps are you going to take for customers to engage you? Would you have a direct market, use radio or television, social media, sponsored adverts, print, etc. to reach out to your targets. Team Your team information should display competence. Most start-ups have a product developer and a marketing officer. This can be seen in the likes of companies like Apple where Steve Jobs is the Chief Marketing Officer with communication prowess and ability to get customers to buy while Steve Wozniack was the developer. 2-3 team members can be the founder or co-founder and launch the start-up and add other team members as the organization grows. Milestones Investors only want to make a contribution because they look forward to returns on their investment (ROI), no investor is your friend. This is the section where you show your traction in the form of partnerships, number of downloads, and most importantly that you generate consistent cash flow and serve a good number of customers Fundraising Information How much funding would you need and in what ways are you going to apply the funding you get. What this funding injection would generate within a specific timeframe. These are questions you want to answer in this slide. Funding is usually needed for operational costs such as rent, staff salaries, office equipment, licenses or certifications, and many more depending on your business needs at that moment. While receiving funding for your business is a great move, it can also lead to the death of start-ups as initial exposure to huge funding without experience or the ability to manage such funding could lead to instant gratification. This is why some start-ups have raised funding but are not profitable. I suggest that a business proves through its financial statement to be profitable enough before seeking funding in order to grow a sustainable business model.   Emmanuel Otori has over 9 years of experience working with 100 start-ups and SMEs across Nigeria. He has worked on the Growth and Employment (GEM) Project of the World Bank, Consulted for businesses at the Abuja Enterprise Agency, Novustack, Splitspot, and NITDA. He is the Chief Executive Officer at Abuja Data School.

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How to Select the Right Investors

At this stage,  you have created your investment teaser deck, but now you are trying to identify which investors to reach out to. The first thing to remember is that the role of your investor is to provide the expertise, network, and investment to help make your business sustainable and scalable. As an entrepreneur, it is very important to know what profile you are looking for in an investor and how to attract the best kind of investors. It is okay to be picky, in fact, it is essential that you are picky and do not accept funding from just any investor who provides it.  In this article, I will share with you some tips on how to ensure you are selecting the right investor that will provide you with the resources to grow a sustainable and scalable business: Your investor should be someone you enjoy working with – not necessarily your friend, but someone you have a cordial working relationship with Your investor should be knowledgeable about your industry  Your investor should have some knowledge in entrepreneurship and/or funds raising Your investor should have a track record that is evident in their portfolio Your investor should have a track record for investing in businesses such as yours, industry, or the stage of your business Your investor should have a strong network  Your investor should be clear on why they want to invest in your business Your investor should do thorough due diligence on you and your business Your investor should bring diversity to your investment group Your investor should bring an appeal that will draw other investors to your business An extra bonus is finding an investor that has a reputation for providing multiple rounds of investments. Selecting the right investor for your business can make or break your business. Do not feel pressured, do not feel rushed. Take your time, keep the conversations going until you are confident you have found the right investor. Contact Versa Research your trusted data, research & consulting partner! References https://carta.com/blog/how-to-choose-investors-for-your-startup/ https://www.forbes.com/sites/alejandrocremades/2018/09/30/how-to-find-the-right-investor-for-your-startup/?sh=4ca39e327b82

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How to be Investment Ready

Research has shown that in Nigeria, 80% of businesses fail within the first 5 years, and out of the 20% that make it past 5 years, just 25% of them make it to the 10-year mark.  Being an entrepreneur in Nigeria myself, I can list out many different factors that affect the success of a business but one of the most important ones in our climate is access to funds. Having little capital is difficult to build scalable and sustainable businesses.  But another challenge could be not having the right network to help scale your business. Both these reasons are why entrepreneurs seek investors. Investors provide the expertise, network, and investment to help grow sustainable businesses and help scale these businesses.  Seeking investors, however, is very challenging and overwhelming for many. You have to first off know the type of investor you are looking for (for example, a banker, angel investor, crowd funder, venture capitalist), the profile of the investors you are seeking, and what these investors are looking for. With this understanding out of the way, you can then work on ensuring your business is investment-ready before you approach them.  In this article, I will share with you some tips on how to be investment-ready Solid Financial Analysis: you have to show your investors that you understand your numbers. Understand your past performance, your current performance, and your future projected performance (at least for the next 3 years). Show that your assumption is justified and your projected performance model is flexible and dynamic enough to account for changes in your assumptions. You should also create a solid revenue model that shows investors the path your business will take to make money. Market Strategy: no investor wants to invest in a company that is targetting a very small group of people who do not have strong purchasing power. You will need to show your investors that you have researched the market size of your business and you have a clear go-to-market strategy. You also need to show them that you have created some kind of traction within the market. Exit Strategy: as you have seen within the start-up world, people do not start a business without an end goal in mind. You need to identify your end goal; is it a merger or an acquisition or an IPO. Identify your end goal and be able to justify why you want this goal.  Strong Team: investors are less likely to invest in a one-man business (nor a sole proprietorship). Ensure you have people that believe in your vision and are inspired to join your team in the role of a co-founder or partner. Be careful when picking your co-founders or partners, ensure they have the same values, goals, and vision as you for the business.  Clear Ask: you have to know and be very clear on what you are asking the investors for, it could be one or more things but be clear. Is it money, access to their suppliers, distributors, network, and so on? Be able to clearly tell investors what the valuation of your company is. The tricky part about valuations is that there are different ways to calculate your business’s valuation, choose the best way, and be able to justify it.  Once all these 5 pointers are clearly defined and understood, you can now create an investment teaser deck, which is a deck (presentation) you send to investors explaining to them the above and why they need to invest in your business. You need to also have supporting documents and evidence. And most importantly you need to be proactive and prepared.    Read Also: Growing the economy: Attracting investment to Nigeria through franchising  

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