1. Startups

Tips for Fundraising for Investors a la Logisly

Logisly's Co-founder and CEO Roolin Njotosetiadi's presentation in the ULTRA DSLlaunchpad incubation program series

Fundraising or fundraising has always been a big topic for startups who are starting a business at the beginning. Even a number of unicorn whose businesses are already well-established are still doing fundraising to this day.

In the incubation program series session DSLaunchpad ULTRA This time, Co-Founder and CEO of Logisly Roolin Njotosetiadi told from A to Z about his interesting experience doing fundraising to investors.

For startups who are just starting a business, this experience can be valuable tips that might be imitated. For that, see the full story and interesting tips from Roolin below.

When is the right time for fundraising?

To answer this question Roolin said, founder must ensure that you have a business plan and milestone what they want to achieve through their products. According to him, it's useless to raise funds if you don't know what the investment will be in the future.

"One of advice Another important thing I got from colleagues founder is don't fundraising when the capital is about to run out. Do it when you have reached something milestone," added Rollin.

Choosing the right funding option

Menurut Rollins, fundraising is not the only way to build a startup. Not a little founder who chooses the path bootstrapped because they can own 100% of the company completely. Not so with fundraising Which one ownership will decrease. Fundraiseg is also considered to have a great responsibility to investors, especially if the funding comes from angel investors.

However, it is not wrong to choose fundraising because there are types of businesses that do require a strong source of funding. In Logisly's case, his party did fundraising because the business model requires a long investment to build a logistics network.

"We are not a business that has been profitable. Actually it is possible, but you will spend a lot of profit for product development and customer acquisition, which means payback period only realized long ago when the business is already profitable, “he said.

He also underlined the importance of paying attention to cash flow when seeking funding. If cash flow allows companies to immediately profitable or founder need a big investment at the beginning before positive, they can consider options fundraising.

Steps to get started fundraising

First, founder must be sure of the business to be built. In many cases, there are startups that get investors even though they don't have a product at the start. Investors will indeed be more interested in the product, even better if you already have one traction.

Regardless, says Roolin, founder still must have a strong vision and business plan, and how to monetize it. Founder must also know the pain points that will be resolved with the product.

"Founder must have the ability to trust the investor that he or she can execute [the product]. How to pass business plan and team. I'm lucky to have funding when starting [business]. When developing a product, I ask insight from various industry players, sketching the product, but I parallel also meet investors, prepare legal, and team,” he explained.

What needs to be prepared?

Founder must prepare a business plan, the purpose of using the investment, and if so, how long the investment will last. Some things that can be highlighted in this business exposure include cash flow, profit and loss, revenue, operating costs, EBITDA, to taxes.

“In Logisly's case, I included key metrics others, namely the number of shippers, transporters, up to the order quantity. This can all be a benchmark milestone to be achieved with the investment needs sought. Goal business is finishing point bread, not looking for as much investment as possible,” said Roolin.

It also highlights the importance of NDA or not when doing pitching. According to him, there are investors who open NDA, but some are not. Whatever it is, para founder ideally stay in touch and provide investors with as much information about their business plan as possible.

Appropriate investor category

When choosing investors, Roolin recommends first finding out the background of potential investors. For example, focus on investment stages. Investors in startups are generally divided into early stage investors (seed funding), Step growth (series A and above), and advanced stages (later stages).

“If our startup is still in its early stages, it is better to find investors who focus on it. Then, also check the focus of the industry you are looking for. There are investors who focus on agnostic or many sectors, while others only focus on certain verticals," he said.

With the involvement of investors, the founder can actually expand the connection because these investors can connect the founder with a network of other investors. This connection will be needed when founder want to do further fundraising, especially for businesses that need advanced investment.

How to calculate valuation

More Coverage:

For Rollin, calculate valuation never has an absolute benchmark, it all depends on the category of business being run. However, some metrics that can be used as benchmarks are multiplying Gross Merchandise Value (GMV)/revenue/EBITDA.

“From this metric, investors try to compare it with similar business models in Indonesia. For example, with traction So, about this startup can get this kind of funding. If the startup doesn't have one traction, investors will [calculate the valuation] by looking at business plan for a year or two," he said.

The second way to look at valuations is the delusion of share ownership. Take for example, what percentage of shares are taken in exchange for the investment earned. According to Roolin, the shareholdings taken by investors ranged from 10%-30%. However, the most common range is 15%-20%

Finally, calculate the valuation on discounted cash flow. That is, investors see how much cash flow startup generates every month. What is the estimate or target cash flow in the following month. He considered that this method is more ideal for startups that have profitable.

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