As the saying goes, “cash is king”, and even more so for startups; yet also for startups, fundraising is often a pretty painful process.
During a visit to Monterrey, Nuevo Leon, Otto Graff and Fabrice Serfati from partner firm, IGNIA, shared with us their best hacks and tips for dealing with investors, fundraising and cash aka “the king”.
“You don’t get married to your girlfriend without knowing her; nor vice versa. Discovering how you leave the toilet seat up sometimes, or how you squeeze the toothpaste happens over time; and something similar happens with an investment”, said the IGNIA partners when sharing their view from the investors’ side of the fundraising table.
In a private talk between IGNIA’s team in Monterrey and the first generation of Startupbootcamp Scale FinTech Mexico City, Otto Graff, Partner, and Fabrice Serfati, Managing Partner, shared with us – quite openly – the aspects in which investors pay more attention when working with to an entrepreneur – and yes, they hate the three follow-up emails a week.
In this first edition of the SCALE Chronicles, we share with you the most important ones:
Clear accounts, long friendships
There is an funny adage in Mexico: “clear accounts, long friendships”, which refers to keeping all information above board in order to maintain longevity in relationships. In business, it’s fairly obvious this importance of having a good understanding, clarity and transparency between all parties.
“Don’t be a roadblock. Have all your business information available, prepare your KPIs, develop the ability to have smart meetings with investors”, advised Otto.
In addition, Otto and Fabrice mentioned the importance of being clear in the participation of other actors and the telling the whole startup story: “Yes, we want (and need) to know if there was another founder”, they say.
Less problem, more solution
One of the main mistakes of entrepreneurs is to delve too much into the problem during their pitch. Generally speaking, investors have a good idea about most of the market opportunities out there – after meeting with so many entrepreneurs, of course. What they really want to get to are the distinct and innovative ways to take overcome them.
“When you do your pitch, explain the problem and the market opportunity quickly then tell us in detail the solution: your value proposition, the strategic advantages and the differentiation,” they explained.
Making the cut
According to Otto and Fabrice there is an ideal stage for startups to start their fundraising journey, and that is when their numbers begin to show they are about to take off.
“We need businesses that already have income, that are not yet generating equity and are in a very fast growth process,” they say.
Likewise, they confirm that in those projects where they detect the founder or CEO as a “one man show” who is also resilient and strategic, they know that he will take the helm from the first day and will know how to choose a good team.
All of IGNIA’s advice can be summarised in the following variables: doing your homework, being clear about your solution and your story, and getting in front of investors in the early part of your growth stage.