Venture Capital In Singapore
Raising venture capital in Singapore has gained a lot of attention in the last few years. The rising Asian startup ecosystem is constantly attracting global venture capital firms to set their base in the city-state as it is already on its way to become the Silicon Valley of Southeast Asia.
If you too are one of those first-time investors looking to raise venture capital in Singapore, the first things you should be determined is to avoid the mistakes that entrepreneurs commonly make. The more you are conscious about the mistakes, the higher is the chance of success in your fundraising campaign.
- Targeting The Wrong Investor
First-time entrepreneurs often waste their time chasing the wrong investors, i.e. venture capital firms that are either not interested in the industry the founder is dealing with or the stage of development of the startup.
VCs usually tend to invest in growth stage or later stage of development although there are many who invest in seed stage too. Moreover, VC firms in Singapore invest in wide variety of sectors ranging from software, biotechnology, healthcare to energy, ecommerce, etc.
Before you start chasing, make sure you are after the one who is suitable both for your sector and the stage of development of your startup.
- Having No Clear Objective
If you have started your own business, you need to have a clear idea of your objective. Unless you have this capability to narrate your ultimate objective to the investors, they can’t gain confidence in you or your startup.
You must know about your product or service and the reason why customers will prefer your product over others’. You also have to know why you need the capital and where exactly you are planning to invest it.
- Raising Venture Capital Too Early
It is much easier to attract a venture capitalist if you have already raised capital from some other sources. Try to start with you own savings; it would be great if you can invest around 25 to 50 percent from your personal savings, if any – or that’s too high, you can try to contribute at least 10 percent. Then there are other sources like friends and relatives, crowdfunding, incubators and angels investors who can also be a great source of capital for your startup. In short, venture capitalists gain trust more easily when they see other investors have already invested in your venture.
- Not Knowing Where Exactly You Will Be Spending The Money Venture capital financing is a risky investment so the investors remain extra cautious about how and where the fund is going. At this point, they would like to see you coming up with a strategic financial planner that gives a clear idea of all the elements for which you will be spending their capital. They do this to minimize the risk associated with the investment and ensure a greater profit.
- Asking For Unrealistically Low Or High Capital Unless your approach is realistic, it is bound to create doubt. If you think asking too less money will make your startup look more attractive, you are wrong. It needs to be optimum, neither too high nor too low. The process becomes easier if you do a proper business valuation; when the times comes you can put forth the exact worth of your company.
- Cold Calling Investors Try to approach venture capital firms through a strong referral. Get yourself introduced by someone who is very close to the investors so that they are more confident while looking at the investment. Cold calling them will be of no use as they won’t even bother to look at your proposal, rather it would be a wastage of time.
So these are some of the most common mistakes that you should never do while raising venture capital. Another important aspect is preparation; lack of preparation can also harm your campaign badly so make sure you prepare well before taking the seat in front of the investors. You must have all the basic prerequisites with you like a unique business idea, an innovative model, a smart and efficient management team, your business valuation papers, an interesting and engaging pitch, a lawyer and most importantly, a fair knowledge of finance and management.
For more information on how to attract a venture capital firm, feel free to visit Merger Alpha http://mergeralpha.com/.