Raising Series A and Pre-Series A Capital - Connecting 'Smartly' For Investments The Venture Capitalists too have turned smart these days, people can not fool them to invest in dodgy ventures
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If we speak to a few venture capitalists about the kind of proposals they get. They will tell you that most of the models, people come up with are not even workable. People just come up with bazar ideas and try to convince others to invest in it, as they themselves have nothing to lose. We have seen wealthy people not ready to risk their own capital and asking others to invest in their startups.
With an increased mushrooming of startups today, and with an equally increased proactiveness from founders of these startups to raise connect with leading venture capitalists and raise their most important rounds of funds, it only becomes imminent that the right strategies are employed by ventures to establish bridges. Today's venture capitalists continually seek the right technology-driven models and smart approaches while rewarding ventures, and eliminating the others.
With smarter models being the criteria, to raise the most important round of funds for any venture (pre Series A and Series A funds), Entrepreneur India spoke to multiple founders of ventures to compose a wholesome directory on the essential smart aspects required to raise pre Series A and the exact Series A rounds of VC funds. Check out the insights below:
Setting the right cause is key
"The problem that we are addressing is that no one should die due to lack of funds for their medical treatment. With Apollo Hospitals Group's strategic investment in us, we will now be the preferred crowdfunding platform for all Apollo Hospital Group's patients nationwide," states Piyush Jain who is Co-Founder and CEO at ImpactGuru which is a crowdfunded platform that aggregates online donations to enable individuals requiring financial assistance for medical expenses, scholarships, and other nobler causes.
Very recently, ImpactGuru raised Series A amounting to USD 2 million in a round led by Apollo Hospitals; Venture Catalyst also pumped in VC in this round. The other investor backing Impact Guru is Apoorva Patni-led CurraeHealthTech Fund.
"Our lead investors were looking to invest in a Lending Fintech and given their focus on B2B startups they were keener on SME Lending," adds Neeraj Bansal, Co-Founder and CEO at Credright (a data-driven startup facilitating institutional credit to SMEs and MSMEs).
For Credright, it was the focus on lending for SMEs that connected with VCs – justifying the fact that investing towards addressing a pain-point is the numero-uno criteria for VCs.
As of now, Credright has managed to raise INR 10.5 Crores pre Series A funds from Accion Venture Lab and YourNest Angel Fund.
Jain believes that when investors pump-in capital to ventures that actually address causes, the level of awareness as far as the startup offerings are concerned naturally increases thereby potentially leading to a solution to pain-points.
"This association will help increase the level of awareness of crowdfunding as a solution to make healthcare affordable for all - particularly cancer, transplant, and paediatric cases," informs Jain.
Impact Guru also offers India, US, and UK tax benefits to Indian and international donors; through a technology integration with GlobalGiving.
Our investors appreciated such technological innovations that helped differentiate our service offering from other players in the industry.
Models introducing technology, comes next
If you are a founder of a startup looking at raising Series A and pre Series A round, it is vital that your models actually harness technology to make it more acceptable to the masses; not merely for increasing business revenues.
Technologists believe that the simplest illustration of the above would be a scenario wherein artificial intelligence (AI) is leveraged to create chatbots to interact with customers on a website of a company that offers services irrespective of domains.
"We built an AI-supported storybuilder for medical fundraisers, with a template for all campaigners to develop their own standardized campaign stories," says Jain.
"Our goal was to free the campaigner of the added responsibility of creating a story when they are already managing their own/a loved one's sickness," he informs.
Now, creating exclusive storybuilders for customers is a pain-point as far as crowdfunding platforms are concerned.
Bansal also echoes Jain's statement with respect to developing technology reachability models.
"Our Credit Model adjusts weightage of parameters by itself based on Chit Partner, Geographical Location, Business Type and Demographics. We like minimalism and agile which helps us keep away from the clutter whilst providing superior experience to our customers and partners," chips-in Basnal.
Bansal caters to the B2B sector and believes that the unaddressed SME Lending opportunity is now worth USD 300 Billion in India alone. This is believed to be due to the lack of innovation in the sector by banks and NBFCs – paving way for startups with technology-driven models to innovate.
Tapping right investors is also the in-thing today
For newbie entrepreneurs, it is the socializing part that plays a key role. It is vital that the newbie business owners consider the entire fundraising process as a project. Also, timing is critical as each venture capitalist generally tends to consider different investing scenarios in different sectors with their funds. The budding startups should identify and get to the VC who is looking to invest in the sector that the startup is desirous of catering to.
"I would advise fellow entrepreneurs to cut through the noise and relentlessly focus on customer delight. There is nothing better than customers talking good about a company to the potential investors," recommends Bansal.
Finally, it is the value proposition showcasing, through aspects like case studies and success stories, that come in handy even before a Series A and pre Series A rounds are to be done.
"Build your team with people committed to take your vision to greater heights," adds Jain.