In the first seven weeks of 2022, African startups raised $1 billion in a report by Africa; the big deal. The business sector including fintech, health, logistics, and other sectors has experienced increased funding in the past few years. In a review document by Future Africa, VC funding in Africa nearly surpassed $5 billion in 2021, even though the figure is small compared to similar regions like India, Latin America, there has been an improvement in how vc funds work
Last week, one of Africa’s biggest fintech companies, Flutterwave raised $250m in a Series D fundraise raising the valuation to over $3bn. Although as a new startup it is more likely you have to raise smaller funds to begin. Finding funding is usually a very difficult aspect of handling a new business. This is because investors are not often convinced of the returns on risks. Therefore to attract and get the funding, you as a startup owner must make the business idea convincing enough. The question is how do I attract VC funds? In this article, we will discuss five tips to attract VC funds:
- Focus majorly on credible results
It is just a vice versa situation, the more credible business results you have, the easier it is to attract business funds. No investor will write a check for a business that has not provided key results. You must show you’re interested in your startup. Identify your market, build your products and sell them, then get feedback from these customers. Before you seek funding, you must be sure you have a ready market for your products.
- Observe and List Their Objectives
For any business niche, there are positive results and also objections. To prepare ahead, create a list of positive results and at the same time objections people may have for not investing in your company. After your list is complete, provide answers to these objections. This improves your readiness for any meeting with potential investors.
- Make Useful Connections through Networking
It is no news that the first stages of starting a business are very challenging but one way to reduce this is soft-selling through networking. Linking with business owners, friends, business executives and other industry professionals is a good way to increase brand awareness. Attending networking events like seminars, workshops, dinners often present great opportunities to meet new people, learn tips and introduce your brand to others.
- Consider Dividends Paying Stocks
There are different types of investors; some want long-term equity while some want a steady cash flow and a stock that pays dividends is one of the best options. Create a stock that offers investment rewards like dividends and a more attractive package. To further prove the above point, Matthew Capala from Alphametic says investors want to see fail-proof investments with immediate as well as long-term returns.
- Be Transparent and Honest
Asides from the attractive promises of huge returns on investments, one thing that is going to help is complete transparency. Relationships are also very important in running a successful business. Whenever you get an interested investor either a family member or your friend, take your time to explain the business process including profits and risks. John Brackett from Smart Balloon advised startup owners to keep investors updated on a predetermined schedule (weekly, monthly, quarterly) to help them monitor their investments.