Of late, capital raising in Singapore has become the primary target of most of the Asian startups. With the government facilitating the entry of more and more VCs in the city-state, the entrepreneurial ecosystem is getting delighted with the increased scope of venture capital raising in Singapore. However, in our excitement, we often end up making some minor or sometimes even major mistakes that ruins all the effort we put into fundraising.
Here are a few tips that you should remember whenever you are planning to raise venture capital for your startup.
Tips For Capital Raising In Singapore
Chase The Investor, Not The Firm
The most important rule while seeking venture capital is to chase the investor and not the firm. Rather than chasing the VC firm as a whole, it is advisable to target specific investors who seem to be interested in your industry. The best way is to interact with other startup CEOs who have recently closed their fund raising campaign as they can best give you an idea of the actual state of the investors. Which investor is currently active, who is broke or who is showing interest in your industry can be known from the new CEOs. Sharing such information between entrepreneurs is quite healthy as it not only increases your contacts but also introduces you to people who can introduce you to the right venture capitalists.
Try To Grab The VC’s Attention
Venture capital industry in Singapore is quite new, so the VCs are also equally interested in knowing about the new startups in the market. At this point of time, if you can cultivate a genuine and thoughtful communication with a suitable investor, it is quite possible that your effort will pay you back.
Once you have enlisted a few names of potential investors, start following them on their social networks like Facebook, Twitter and others. Become a regular reader of their latest posts and leave a thoughtful comment whenever possible. This is definitely not a one day gesture but you should do this on a regular basis. However, make sure that you do not end up doing anything in excess. Your comments or praise should be realistic enough to help you grab the type of attention you are looking for.
Get A Genuine Referral
When it comes to seeking referrals to the VC, you will find many professional service providers. The strategy, however, is not as effective as getting a referral from a member who is either very familiar to the VC or has no professional motive, i.e. one who has nothing to gain from your achievement.
Usually, the CEOs of the VC’s portfolio companies work as the best referrals but for this you might need the VC to introduce you to their portfolio companies. And in case, it doesn’t work, you can directly approach their portfolio start-ups and discuss your plan of seeking venture capital. If you can form a sound relationship with the executive of the portfolio company, they will happily introduce you to the VC with best of their efforts.
Convince The VC For Investment
The first meeting with the VC is more of a make or break situation. Your attitude, your words, your team, everything will combine together to set the mood of the VC for investment. Never try to ask about the money in your first meeting. Let the VC know your business plan, for which you have to prepare a convincing pitch to be read in front of the VC. If you really have a unique business plan, it will never go unnoticed. Start with discussing your business with the VC and they will automatically come to a conclusion whether or not to invest in your business. It is very important to target the right investor right from the beginning. Often things end up abruptly due to lack of relevance of business to the investment focus of the VC.
Something that can give significant credibility to your business is your personal savings as the first source of funding. If you can contribute 10-25% from your personal savings, the VCs will gain confident more easily. However, if you are not are in a position to self-finance, you can directly talk about capital raising to the investor.
There are many networks in Singapore that connect entrepreneurs to suitable venture capital firms in Singapore or angel investors. Such networks drastically reduce the time required to find the right VC and also serve as a knowledge platform for startups owing to the presence of financial and management advisers of the startup ecosystem of Southeast Asia. Some of the popular networks include Merger Alpha, BANSEA, SVCA and others. Try to become a part of such a network and save your valuable time and money while venture capital raising in Singapore.
For more information on capital raising in Singapore, feel free to visit http://mergeralpha.com/.