How digital entrepreneurs can master the essential art of fundraising


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Governments in the Middle East have always known that startups and SMEs form the backbone of their economies, employing the majority of workers and producing the lion’s share of their countries’ non-oil gross domestic product.


But even by regional standards, recent fundraising activity has been intensive. In Saudi Arabia, investment levels in startups in the first half of this year increased by 65% ​​compared to the same period a year earlier, with capital raised in the Kingdom amounting to around one in seven dollars in the region. MENA.

The surge was sparked by deals like that of fintech firm Tamara, which closed a $ 110 million funding round. And in the neighboring United Arab Emirates, nascent companies have attracted $ 755 million over the same period. When you consider the number of these companies that are technology companies, it is obvious that now is the perfect time to be a technology entrepreneur in the region. Every government would be happy to support the next tech unicorn.

Due to the cloud, tech companies have a shorter evolution path and therefore, under ideal circumstances, a shorter path to an initial public offering. But those ideal circumstances all revolve around funding. Investors support the winner, and market share is normally determined by this support. So if you want to be on that fast lane, you just can’t wait for the day when your cash reserves will back you up. You have to find hungry investors who you can turn into believers. They look for a prospect with high growth potential, with the understanding that, for example, growth of just 10% can represent an exponential return on their investment for them. Here are some tips for attracting investors to your business:

1. MAKE YOUR STORY When assessing the value of your business, investors will look beyond the financial aspects to find out your story and vision. Uber, for example, can be valued much less when viewed as a mere carpooling platform than when viewed as a logistics hub. So your story should be about where you are going, rather than where you are, or even how far you’ve come. Take your pitch, some preliminary financial data, capitalization tables, market research, and an information memorandum, and talk to potential funders. Build your story based on their comments, rather than wasting precious hours and days crafting a post that might not resonate.

2. PROTECT YOURSELF (LEGALLY) Be careful not to cede the farm, in terms of articles of association, shareholders’ agreements and veto rights, to investors. Think of legal counsel as one of the most important investments you will make. Don’t settle for the cheapest; rather, hunt for the wiser. From the rounds, seasoned legal experts specializing in venture capital and part of a global firm will be invaluable in protecting you and other shareholders.

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3. BUILD YOUR NETWORK OF INVESTORS Many seem to believe they have to wait for investor presentations, as if cold communication is unthinkable. This is not an optimal approach. You don’t need to find out just about upcoming fundraisers. Try to have a call with a potential investor or investment banker every two weeks, to keep yourself in mind. As you build your network, it helps categorize investors. Identifying an initial set on which to test your pitch can give you invaluable feedback that you can then use to refine your proposal iteratively, to the point that it’s tight as you approach investors who interest you the most. Plus, don’t be afraid to stay in touch with those who rejected you in previous rounds, perhaps on a quarterly or yearly basis. Conversation with investors then tends to be much easier to have than a simple sales pitch.

Most investors are open to hearing your story, even if they aren’t ready to invest in you yet. Unlike consumers or businesses that may not be in the market for a given product or service, investors and venture capitalists actively seek out businesses with potential. However, when you start to get serious and get into “fundraising mode”, be sure to talk to the decision maker. Many funders use factfinders as a buffer, and the person you talk to can just measure and assess the market on their behalf, or benchmark you against one of your competitors. Always remember to leverage your shareholder network to make sure you are face to face with the decision maker.

4. GET THE RIGHT TIME The deadlines – getting all of your investors to line up to express their interest and sign letters of intent – will be one of your biggest challenges. An advisor from an investment bank can be helpful in getting things done. But while some regional pros will be willing to help you with rounds in the range of $ 10-15 million, you can get by without using them until the Series C turn. Starting with Series C, however, investment bankers can be not only useful, but necessary, and their absence can even deter investors from fully engaging.

Ultimately, don’t forget to collect as much as you can on each fundraising round. Look for more support than you expect to need for the next 18 months. Always try to close each round before the fourth quarter so that you can deploy the funds in the new year. Focus on your growth, as year-over-year progress remains a strong indicator for investors. The area is full of success stories, and you can be one of them. With the right story, well told to the right audience, you can build your network, bide your time, and mount your fundraising campaign with confidence.

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