Fundraising Tips for Beginner Startups

When a new startup is founded, the thing that is the concern of startup founders is how to get additional capital. Initial capital can come from your own pocket, friends, or family, but there are times when the company needs more capital and the founders start targeting funds from investors. Investors who are usually involved in the initial funding process type venture capital (VC).

It is not easy for a startup to be able to immediately get additional capital. On the other hand, investors also do not want to randomly choose startups to invest in. There are several points that they determine and must be considered.

Traction and growth

One way to tell if it's time for a startup to start an early stage of fundraising is based on its traction and positive growth. For this reason, make sure the startup has traction, has a large enough number of users, and has a validated business model.

"In our opinion, the time is right to do fundraising is at that startup proven to produce significant traction growth. Indeed, if we look at the request data that goes to RenovFun quite good, which can be around 5-8 requests that want to apply for renovations every day, but there are many obstacles from clients that are still our big homework to be resolved completely, so there will be more project deals what we can get," said RenovAsik Founder & Chief Strategy Officer Indra Setiawan.

Once traction is gaining ground, avoid providing inaccurate information to potential investors. Don't add it on purpose to get their attention. Give the correct information, according to the traction that has been obtained.

This, according to East Ventures Analyst Devina Zhang, can be known directly by investors during the process due diligence, when all the data will be studied. So avoid developing the numbers because investors will find out eventually.

"Never give false information about startup growth and traction. Tell the startup achievements and achievements. Also inform the failures that have occurred, so investors will know correctly the condition of the startup," said the CMO. CoinWorks Jonathan Bryan.

Determine the funds needed

Another thing that must be considered is determining from the start how much funds a startup needs to start running a business. Although many startups start their business online, bootstrap, when the product starts to develop and the traction is large enough, additional capital with a large nominal may be needed by the startup. Therefore determine how much money is needed, what the funds are used for, and how long the funds can be stored.

VCs like East Ventures does not have a definite formula for the calculation of funding and distribution of startup shares. It all depends on several factors, such as the amount of funds the startup wants, startup performance, and future projections. The shares obtained by the company will be claimed depending on the agreement with the related startup.

As for Venturra Discovery, normal dilution for initial funding rounds it will usually take around 20-25% for each startup.

"Everything has a price, it's just the price that matters. It's important to understand the expectations [of both you and the investor]. The amount should be reasonable and show the founder value, ideas, how you can make money for investors," said Co-Founder & Managing Partner Alpha JWC Ventures Jeffrey Joe.

Choose the right investor

The presence of a growing number of local and foreign VCs makes the fundraising process easier. However, for a smoother future synergy, choose what kind of investor is relevant to the business model and of course suits you as a startup founder. It is very important to conduct research, gather information, to conduct informal meetings with relevant investors.

"Learn the differences from investors and try to understand what they want in their portfolios/investments. Also understand the individual profiles of the targeted VCs, especially GPs (General Partners). Find common ground or common interests between you (and your company) and investors where you're going," said Jeffrey.

Make a list of investors you will meet, including as much detail as possible about specific investors (company, location, and investment amount). Later, relevant investors will be seen based on investment size, investment stage, experience in the company's industry, as well as their geographic scope.

"There are many ways to reach investors, the best way is through acquaintance with someone the investor knows. Otherwise, you can always reach investors through their site, or even Linkedin," said Partner Venture Discovery Raditya Pramana.

According to Jeffrey, try to establish a good introduction at the beginning directly. Avoid using email or contacting directly by phone.

"VC received hundreds of proposals / pitch deck every month and one of the best ways to excel [stand out] among those piles is being introduced by someone familiar with the GP or the team from the VC. Referrals are always a good way to be prioritized."

Presentation and "elevator pitch"

When the meeting has been scheduled, the next process is a presentation or commonly referred to as "pitchingIn general, you will be asked to present material that contains a basic overview of the company (product, industry overview, market size, etc.).

Deck This will be the startup founder's handbook to guide investors through the first meeting, so make the deck structured, simple but rich in the important details you want to highlight.

"We firmly believe in the motto 'founders first', which means that A good startup founder will certainly produce a good product, also considering the market potential. Thus, founders who have the right background and expertise have bonus points," Devina said.

It is important for startups to prepare materials, proposals, and presentation materials when pitching take place. According to Chairman and Founder Gorry Holdings William Susilo, make sure to prepare pitch deck easy to read, including what problem is being solved. Key points should include how urgent the problem is, market size, business model, revenue model, product, fund allocation, attractiveness and founder profile.

"Completely prepare for business traction. Make sure it is in line with the requirements of each investment stage. For example MVP is not enough for Series A funding, while it may be enough for a round seed, said William.

According to Raditya, when pitching It's best if startup founders don't get defensive when investors ask tough questions. Feel free to treat the session pitching like casual conversation. All questions investors ask about your company should be answered.

"Even though your startup has only been running for three months, for example, with data we can see if the founder has good business execution skills. There are also many other things that must be considered, such as ability founder, market size, product building capability,execution capability, and others, said Raditya.