Some company founders aspire to only modest scale for their businesses, and this is a perfectly legitimate objective – the entrepreneur is the captain of his ship. Such a model, however, is not compatible with a VC model seeking to generate capital gains performance or impact investors seeking a huge social return and a capital return on their investment.
If your ambition is limited in scale, such as merely running a lifestyle social business or running a social enterprise for awards, prizes and the hype then outsourcing your fundraising to an intermediary could be a neat time saver. For the more ambitious entrepreneurs focused on real impact though, we recommend you embrace the fundraising hustle.
At GrowthAfrica, we have raised USD 32 million in investment & grants for and by our entrepreneurs and from that we’ve had a success rate of 87%, from businesses reporting a sustained benefit from support and services rendered.
Firstly, if you’re raising a seed round, the chances are that your company has not yet achieved product market fit. That’s what you’re raising money for. You should be looking for an investor who has the skills and connections to help you get there (The twice annual GrowthAfrica venture forum is a platform meant to introduce entrepreneurs to these investors). Many investors have deep operational experience running companies that were once like yours and the good ones will use it (and everything else in their arsenal) to help you. Your seed round is about much more than just the money. We also help entrepreneurs assess which investors will be of most value to them and match them.
Secondly, getting to know each other is a crucial part of both sides’ due diligence. By investing (and by you accepting that investment), you are entering a long term, multi-year relationship. The seed fundraising process is like the first few dates together. The initial meeting will be all smiles and laughter, but then there will be a few squabbles over valuation and terms as you proceed with negotiations and knowing each other better. In doing so, you’ll learn a whole lot about each other (investor, startup and GrowthAfrica as well) which is a great thing in the long term.
Finally, as the founder, you wear many hats. For investors to believe that you’ll go from a team of five to the next big thing thing, you’ll need to be able to sell the hell out of your company to future employees, to customers and to all kinds of other stakeholders. Fundraising requires that same kind of hustle. In fact, hustle might be the single most important trait for a successful entrepreneur — Investors want to see it in you, not your banker, advisor or accelerator or mentor.
Fundraising is hell but you have to do it. Ultimately though it’s you who has to go out and sell yourself, your co-founders and your idea. Put in the effort and don’t be distracted by potential shortcuts.
GrowthAfrica also ensures the availability of the most appropriate type of funding for our early stage enterprises.
We present to you an exciting portfolio of investment opportunities in Africa. It caters for a diverse investment profile and holds opportunities for angel investors, venture capitalists, seed funding firms, private investors, institutional- and impact investors. We act as your partner and reliable and vested, intermediary for your investment information because it is in our interest to evaluate the start-ups with caution and in-depth research, and then to also poise the companies for ongoing success upon graduation from our impact accelerator with the tools, advisors and other resources we have at our disposal. This creates our vested and reliable interest to see the companies we work with succeed long-term.
The above post is an abridged version and a mashup of the key takeaways from links below.
Don’t Send a Banker to Do a Founder’s Job: Seed Fundraising Can’t Be Outsourced
Should I hire a fundraising agent for my startup?
Fundraising is a job that founders must do themselves.
Why you should NEVER use an external advisor to raise money.