I had raised $10mm from venture capital, AMAš«”
Ken Lian
45 replies
Raising capital is incredibly challenging, especially given the current macroeconomic conditions. We are fortunate to have the support of excellent investors like Amplify, iFly, Good Water, and Gold House. Over the past 5 years, I have successfully raised close to $10mm, and I am actively raising funds in 2023. If you have any questions or need any assistance, feel free to ask me anything.
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Ken Lian@kenlian
Here is a fun fact for the community, each partner at the investment firm can probably make one or two deals each year, so you really need to make him/her believe you are the ONE! And I probably pitched 300+ investors in past 5 years, 95% of them pass on us. So, getting rejections is kind of normal, I once got 5 emails saying āNoā in the same day, that is part of the entrepreneurship: getting use to rejections and carry on faithfully, still love it! ā¤ļø
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@heyjoshua I am glad you ask this question, this is also a struggle for me at the very beginning. The easiest way is try to be accepted in a incubator, you need to convince them to your idea and team, generally they write the first check, $50-200k and takes 10-15% of your equity, donāt worry too much about dilution at this point. Once you are part of the incubator community, you then can begin to reach out all the portfolio companies and ask for advice and in person meetings. Founders in general are very supportive to others founders from the same investor and are willing to meet you, chat over coffee or beer and then you get to know them, ask them for intro to other people you should meet, advisors you should get mentors from and just keep on expending your network. Add everyone you chatted with on LinkedIn so that you get mutual connections for upcoming networking. It takes time but this is how I grow from nobody to somebody.
Iād love to hear about your first pre seed raise and what advice you can give start-ups at MVP/testing stages.
Thanks
@jenna_farrell Hey Jenna, the initial stage of raising pre-seed funding can be just as challenging as the later stages. To kick off the project, you'll need three key elements: a reliable team, a minimum viable product (MVP), and some resources to get things going. When it comes to building a team, prioritize trust and skill sets over fancy titles. It's okay to lack a CTO at this stage. As for the MVP, remember that a well-designed website can serve as a solid starting point. If you can identify a problem that resonates with a meaningful market and attracts investor attention, you can raise significant funds even with just a website and a waitlist. Investors are often willing to believe in you if you can demonstrate early signs of pre-product-market fit. For instance, we raised $3 million with a 50k waitlist before launching our Cheese debit card. Acquiring resources doesn't solely rely on money. When I started my current startup, Cheese, I had only $5,000. It's crucial to build an investor network and a talent pool that you can inspire. A diverse team comprising designers, developers, accountants, legal advisors, growth marketers, and product managers is essential. Moreover, showcase solid results such as a long user waitlist, exclusive contracts, and your personal reputation from previous experiences, these are all unique resources you should try to have but takes time.
Furthermore, it's worth noting that securing your first investment at the pre-revenue stage is possible. However, it's crucial to have a clear plan on how you intend to generate revenue and ensure that your business is viable with a roadmap to reach gross-profit breakeven and eventual profitability. During the initial raise, don't stress too much about company valuation. Many successful companies were initially valued as low as $1mm during their first round. Airbnb's early valuation was at $4mm. Your first investor take great risks, they deserve the reward.
@jenna_farrell To be honest, it's a case-by-case answer and requires conducting numerous AB tests on the landing page, messaging, advertisement channels, and target audience. You're essentially building engines that work specifically for your product, with the aim of delivering the right messaging to the right audience through the right channels. So, your focus should be on achieving these three key aspects: getting them "Right."
That being said, Facebook/Meta offers more attributes and interest groups that you can segment and target. It also provides valuable early signals to assess the relevance of your messaging and audience. Hence, it's a good starting point for your AB testing. Once you have identified the right audience and effective messaging on FB/Meta, you can then expand and display it on platforms like Google or other channels you believe would be effective. Keep in mind that this testing process takes time and can be costly at the initial stages.
During the early days at Honey, we would try 100 creatives with different massaging then kill the less-performing 50 and then add another 50 new one and continues to test, after 2 weeks, you should have enough signals from users to know what works and what doesn't, and you just give all you have to the one that is working.
Wishing you the best of luck with your testing endeavors.
@chrismessina let me know my summary of three key elements to get your first investment make sense, would like to know how did you get your fist check?
I would love to hear the full story
@abrar_sami1 Haha, it is joyful but full of tears and sweat, I am still grinding and have not yet reached the climax of the story. I saw that you are launching soon, congrats! I am also working to launch Cheese on PH soon, and would like to have your support when we go live.
How do you answer the question around moat, is there a general framework to think around this ?
@kenlian
We're still in the early stages of figuring it out, we're actively engaging with our users and their feedback to understand it better. I'm certainly interested in learning more about any frameworks or methods that could assist us in this process. Please feel free to share any resources you find valuable.
Look forward to learn about it. :)
@ramandeep_sharma1 It is getting harder, Q1 2023 has the less capital invested in the last 10 quarters.
@ramandeep_sharma1 From a pre-product and pre-revenue standpoint, raising capital is both challenging and advantageous. Without a product or revenue, you're not obligated to demonstrate strong metrics like user growth, CAC, LTV, or revenue. Instead, your focus should be on providing robust signals to investors, convincing them that there is significant user demand for your product and a willingness to pay for it. Signals such as a substantial waitlist, user feedback from surveys, or partnerships with prominent brands can all serve as strong indicators of potential success.
I'd like to hear about it.
Also, let's connect on linkedIn!
@onchainparham sure, mine Linkedin is here: https://www.linkedin.com/in/runx...
Congratulations on successfully raising $10mm from venture capital! That is an incredible achievement and a testament to your hard work, dedication, and the value your business proposition brings to the table.
How much was your revenue when you launched your pre-seed or seed?
@vladimir_zivkovic yes man, it was very difficult even we have some good track records. It was an dilemma for us, we have to raise a certain amount of money so that our partner bank agrees to back us to launch our cheese debit card, so we have to raise a seed after the pre-seed. Each raise is complicated, you know.
@vladimir_zivkovic Thanks bro, it means a lot from a founder to a founder. I wish you good success as well and don't forget to take care of yourself in this tough environment.
@kenlian I know how hard it is, and what it takes to raise capital while still managing company on a day to day basis. Unfortunately my previous startup failed even if we raised all that money, but it is a lesson learned... Health is most important while you are in that process, stress and sleepless nights can eat your mind...
In your professional opinion, when evaluating potential investments, what would you consider the primary factor influencing investment decisions? Is it the startup team's strength, the founders' individual qualities, the intellectual property rights involved, or the Monthly Recurring Revenue (MRR), or is there another element that you believe holds more significance?
@vladimirzh Establishing trust with the lead investor is crucial, as they typically make only a few deals each year. Your objective is to convince the lead investor that you are the one opportunity worth trusting and investing in. It is possible to secure funding even without generating revenue, provided the investor believes in your capabilities and potential compared to other founders. Remember, investors are pitched by numerous founders, so it's essential to differentiate yourself and demonstrate why you are the best choice.
Hello, here is the investor pitch tracker I use for fundraising, feel free to download it. https://docs.google.com/spreadsh...
Wow, that's really cool! Can you tell me what qualities investors are usually looking for in entrepreneurs, from your perspective?
@lydiawang Investors look for entrepreneurs who have vision, passion, problem-solving skills, execution abilities, market knowledge, strong leadership, coachability, financial acumen, integrity, and trustworthiness that is what ChatGPT will answer. lol. But my personal answer is that during the pitching process, investors will gauge whether you possess the essential qualities, skills, extensive network, and industry knowledge required to scale your business successfully and achieve remarkable heights. Additionally, they assess your determination and resilience to overcome challenges, secure your position in the market, and ensure the survival and growth of your venture. Basically, investors support founders who can rock it when things are going well and hold it together when times get tough.
Wow, that's cool. I'd love to hear how you did it.
@ruby_smith01 In summary, I pitched to 300 investors, faced rejection from 270 of them, but received support and belief from 30 investors.
Congratulations on the 10 million raise. We are in the pre-seed stage now. Any advice? And how much equity for the 10mm raise? Thank you.
@thesystemarchitect68 Hello Mike, $10mm is how much I raise in the past 5 years, not all in one round. At your pre-seed stage, you will expect 10-15% equity for the round.
Raising capital indeed presents significant challenges, especially in today's economic climate. It's impressive to see the support you've garnered from notable investors like Amplify, iFly, Good Water, and Gold House. For those of us working on financial aspects in South Africa, utilizing tools like the South African SARS eFiling system can streamline our tax and compliance processes, making it easier to focus on raising capital. If anyone needs more information on this, here's a helpful resource: https://sars-efilings.co.za/. Feel free to ask me anything as well!