Have you launched or are you going to launch your website? Do you think you need external investors because your bank refuses to grant you a loan like many e-commerce sites? Here are 5 things to keep in mind when embarking on a fundraising process …
As for a baby, it can take 9 months!
Fundraising takes time and commitment. The internet world may be fast, but the fundraising world is not as fast. Raising funds is like running a competition: there are a lot of candidates, but very few chosen at the end. Time is a factor that must be taken into account and each stage of the journey deserves careful consideration.
The journey of a fundraiser can last between 3 and 12 months depending on the project, the amounts to be raised and the period. You will first need to identify investors who correspond to your project. There is no point in sending a request to a fund specializing in e-commerce in textiles if your plan is to launch a dating application! Each investment fund has its investment specifications with very specific criteria:
- Investment range;
- Size of the business (minimum turnover, etc.);
Identifying the funds and learning about their functioning, their investment priorities is therefore essential.
After this identification stage, you will move on to the fundraising phase, the organization of the first meeting, the second meeting, until passing before the committee.
Each phase of fundraising deserves an involvement. Taking your time to focus on each phase will be key to the success of your fundraiser. If necessary, do not hesitate to anticipate the phases and prepare for any eventuality. Keep in mind that the time you spend on fundraising is the time you don’t put into developing your e-commerce site! Fundraising can be a marathon. So calibrate well the time you are ready to devote to it.
Prepare well by writing a solid dossier
The file in question is composed in particular of your business plan. It is obviously advisable to write your business plan well. This is a document that will be requested by all investors. It is a real communication tool with your various contacts.
Better than your business card, the business plan will open doors for you to secure meetings. It is therefore essential to take care to write this document as seriously as possible. Be careful not to neglect your executive summary. This is the first part of the business plan that you will send to your investors. The latter contains an attractive, clear and precise summary of your project in 2 pages. Be careful to be concise! It is this document that should make you want to go further in reading your business plan or even suggest an appointment for you to tell him about your project in person.
Prepare investor questions
We start from the idea that your business plan was convincing enough to allow you to get an appointment. You have done part of the journey … but most of it remains to be done. Indeed, for the moment, you will have to prepare to make the best possible pitch. Just like a footballer has to train for a successful match, an entrepreneur must keep in mind that the key to the success of a pitch lies in its preparation!
Preparing as a team and anticipating questions that investors may ask you is essential. In most cases, investors will ask you about the market you are targeting, your customer acquisition strategy, its cost and its ROI, the state of competing sites and your specificity in relation to this competition. They will also want to know how much money you are investing or have invested in your site yourself, how much you are looking for from them and how you plan to use that money. Is it for communication operations? Adwords? For your stocks? You will have to be precise! “I want to raise 300,000K €, of which 100K € will be invested in Adwords operations, allowing me to attract 100,000 targeted visitors, 3,000 of whom will become customers with an average basket of XXX and a repeat purchase of Y”
Having an appointment is a favorable sign. This is proof that your project appeals to investors. In any case, you will have to stay clear in your slides. You won’t need to have a PowerPoint loaded with information. An illustration accompanied by your verbal explanations will suffice. It is also important to be convincing in the answers you give.
Networking: Getting recommended, an accelerator
Raising funds, not only on the business plan and paper documents ! It is also and above all a matter of interpersonal relations. Networking is a perfect way to exchange, get known and be recommended. Indeed, investment funds receiving a lot of files, getting recommended by a person is a real plus (you can then go through a fundraiser or make yourself known during a competition or an entrepreneur event.). If it is not necessary to fall into the opposite excess which consists in participating in all the events existing for entrepreneur, it is important not to neglect networking when you are looking to raise funds. To find a job, the CV and the motivation letter are essential, but the recommendation by your former employer or an internal person are accelerators. To raise funds, the recommendation by someone in the community, by another successful entrepreneur or by a proven fundraiser is a real plus.
One chance not to be missed
Fundraising is a complex operation that should never be taken lightly. We must make the decision to do it after careful consideration.
It is advisable to ensure the solidarity of the team, but also to ensure that the company is 100% ready. We do not raise funds for the pleasure of raising funds but to pass a very specific stage. Too many sites or start-ups are engaged in a race to raise or even the biggest fundraiser as if raising funds was a guarantee of success. Raising is a means, not an end. Keep in mind that there is only one chance to make a good first impression. It is better to prepare and target some targeted funds than to try to multiply contacts in the hope that the volume of applications will be favorable to you in the long term! It is better to postpone your fundraising if it is not essential and reach a minimum level (X unique visitors, X € turnover, X subscribers, etc.) before engaging in this process. Always ask yourself this question: Does my fundraising make sense? Does it make my site pass a level? What other means of financing can I use? Am I ready and do I really need this fundraiser?