BENCHMARK YOUR COSTS
Feb 21, 2020 Pierre Hermant #Finance

Fundraising: Show me the money!

What's bootstrapping?
 
Well, bootstrapping, that is, trying to get through with little at the beginning, and trying to slow down the fundraiser, it has advantages and disadvantages. The downside is that if your business really has the potential to make a nice turn, it can be slowed down.

 

 

When is it necessary to raise money?
 
The ideal time to raise funds is as soon as the product has been properly validated by the market, that customers are buying and that you explain to your investors that your investments can speed up sales and that you have shown that there are buyers. That is the perfect moment. It is more complicated, sometimes a lot of financing is needed in the beginning, and rightly so.
 
Which investors should choose?
 
Well, in investors. You will need a mix between banks, your friends, public and private investors, and also what we will call smart money, smart money is what : One hundred thousand euros coming out of nowhere in quotation marks, and 100K coming from a specialist in your market who will be able to help you, this currency and recognized as smart money, in other words that will help you to benefit and that will bring you a little more than just cash.Je moet geld inzamelen om waarde te kunnen creëren voor het bedrijf, als je geen investeringen hebt om te doen en investeringen waarvan je zeker weet dat ze de marge kunnen verhogen of de marge kunnen laten groeien, haal dan geen geld op.
 
What are the secrets to raising money?
 
The secrets are to well defined your need for funding and to be able to go at the right time to find the investors, ie in general an investor who comes in, he will not come in just when you have the idea and no customers yet, nothing validated. It is necessary that you have a degree of technical and commercial maturity sufficiently important, at this level I advise you to use the tool "MatMax" to be able to define where you are and when you are in general in the box 7/7 and well there it is easy to find financiers. http://www.wsl.be/matmax/
 
What's bootstrapping?
 
Well, bootstrapping, that is, trying to get through with little at the beginning, and trying to slow down the fundraiser, it has advantages and disadvantages. The downside is that if your business really has the potential to make a nice turn, it can be slowed down. When is it necessary to raise money? The ideal time to raise funds is as soon as the product is well validated by the market, that customers are buying and that you explain to your investors that your investments can speed up sales and that you have shown that there are buyers. That is the perfect moment. It is more complicated, sometimes a lot of financing is needed in the beginning, and rightly so.
 
Which investors should choose?
 
Well, in investors. You will need a mix between banks, your friends, public and private investors, and also what we will call smart money, smart money is what : One hundred thousand euros coming out of nowhere in quotation marks, and 100K coming from a specialist in your market who will be able to help you, this currency and recognized as smart money, in other words that will help you to benefit and that will bring you a little more than just cash.
 
Burn money without burning your wings?
 
Burning money without burning your wings is a bit of a fear for everyone, the idea is to have interlocutors and people on your board as well, to be well surrounded so you don't tell stories to yourself. So that you don't burn your wings, surrounded by people who speak the truth.
 
What precautions should be taken when dealing with investors?
 
The precaution is to take the time to choose them well, to make a schedule with criteria that you find important to compare your investors. And then perhaps discuss it with another entrepreneur, your banker or a specialist, to see if it's the right time to bring in these types of investors. Your fate will be linked, it is important that when the shit hits the fan it is important that when the shit hits the fan you can be sure that you and your investors are looking at the same destination and that your roads/destinations are linked.
 
What are investors interested in?
 
For an investor what makes a project interesting is variable, it depends on what is key for him, if he comes for profitability, the idea in how much time he can do times 2 or times 3, it is interesting for him to know the maturity of your company, How fast according to your business plan it will go, what is important for him is to know the team, and to know what this team has already achieved, there are some criteria that are important for him, for others it is also the value that the company will create next to profitability, for example social or impact companies.
 
The Term Sheet, the key to a successful fundraiser?
 
In any case, it is important to know what you want and what you do not want, and the fact that you can put all this in a contract and as soon as possible the points to discuss, it is essential, now that one company is not the other, in your term sheet you have points, see a lawyer because it is better to consult him before than after, it is better to announce the message than to have a long discussion with your investors. And that they withdraw because there was a condition that is indispensable for you and unacceptable to them.