The LadyBoss team organised Show Me the Money – Finding Capital for your Business on April 27, 2017 with over 150 women attended our event. The event comprised of a networking session and a panel discussion.
The panelists were Stephanie Crespin founder of StyleTribute, Rina Neoh co-founder of Mercatus Capital, Carolyn Ng Investment Director of Vertex Healthcare and Vesi Kertikova investment manager of LGT Impact Ventures. The panel discussion was moderated by Melissa Lim, Co-Founder of LadyBoss Asia.
Melissa gives you the highlights of the panel discussion!
Q: When is the best time to fundraise?
- “Everything is possible today.” This means, you’ll even see founders with only a PowerPoint and idea asking for money.
- That being said, Stephanie Crespin, founder of StyleTribute said you should “push back fundraising as far as possible.” Not having venture capital money at the start will push you as a founder to think of creative, cost-effective ways to generate revenue and solve problems, even without the help of investors. Also, raising money takes a lot of time; it shouldn’t be one of the first things you focus on when you start a business. Instead, dedicate that energy to getting the operations
- Carolyn Ng, Investment Director at Vertex Ventures also gave a great tip: “fundraise even when you don’t need the money.” When your business is not going well, the investors are the ones with the upper hand in that deal, and your company may be undervalued. You should always be looking at raising capital, so that you don’t need to worry about being taken advantaged of when the economy is on a downward trend.
Q: How did you raise money?
- For Stephanie, she went to as many conferences/events as possible. “Make it known that you’re raising funds,” she said. Tell everyone you know, you never know who in your network can connect you to your next investor.
Q: How do you go about valuing your company?
- Stephanie suggested to talk to entrepreneurs in the same industry, same field, who recently (<1 year) raised funds, and ask them how they did it.
- Don’t present to venture capitalists an overvaluation of your company, thinking that the investors will bargain down, Carolyn said. You will have to justify your valuation with data. Also, consider the long-term growth of your company, and how it will perform during different cycles of the economy. Don’t base your valuation on the idea that the economy will always be on an uptrend.
Q: How do you decide how much equity to give out?
- Generally, the industry average is 20-30% for the first fundraising round.
- Be very, very mindful of your first investors. The first investors are crucial to the success of your company, as your future potential invetors will ask you who’s on your board. If they know those investors on your board, you build a credibility with them, and they’re more likely to join your board as well, to work with people they already trust in the industry.
- Vesi Kertikova, an investor from LGT Impact Ventures, made the comment “Your lawyer will tell you, it’s easier to get a divorce from your husband, than to get rid of a bad investor.”
- When it comes to corporate investors, they’re going to ask for a majority holding, because they will plan to integrate your business into their current operations. Angel investors and VC take minority equity holdings because they are interested in investing in you, as a founder, and want you to stay strongly incentivized to do well.
- Make sure you have a lawyer to work out the equity scenarios – you don’t want to end up in a bad situation because the contract was not clear or has loopholes!
- All the panelists, particularly Rina Neoh, the founder of Mercatus Capital, advocated that founders give their first employees some equity. Especially for your key employees – Rina gave the example that, if you’re a tech start-up, you should definitely give your Chief Technology Officer some equity, otherwise investors will question how invested your key employees are to the long-term success of your company.
Missed our LadyBoss event last week? Watch this space for our next event in June!