Expert advice in fundraising for young entrepreneurs

Tuesday, 19 August 2014 02:57 - - {{hitsCtrl.values.hits}}

By Senuri De Silva The inability to attract funding unfortunately holds back many ambitious innovators according to top officials in the field of IT startup companies. In an attempt to remedy this situation, Sri Lanka Association for Software and Service Companies (SLASSCOM) hosted a thought leadership forum with guest speaker, SLASSCOM Advisory Board Member, Raomal Perera, who shared his personal experiences in a presentation titled ‘An Effective Fundraising Journey’ last Thursday. Perera, who is a veteran of the field, drew stories from his experiences, not only of success but also of failure to provide an honest discussion of what may be in store for aspiring entrepreneurs. "It’s a question of believing that we can do it. One of the things in common between Sri Lanka and Ireland is that they generally don’t like to sing their own praise or have the confidence to believe that they can create something big Often people say it’s about the technology or the team and all sorts of other things but very rarely do they say it’s about you. When someone is coming to invest, remember that they’re investing in you. You are the person they are looking at and saying, ‘can we trust this person, does this person have the passion to make it happen?’ and only then do they think, ‘is this a good idea?’ It’s easier to get money when you have money. Don’t be afraid to have more money than you need because it’s easier to negotiate your terms. And don’t wait till you run out of money to raise more money People think that entrepreneurs are risk takers but really they are the people who know how to minimise risks – SLASSCOM Advisory Board Member Raomal Perera" Having lived in Ireland for most of his life, now teaching as a professor of entrepreneurship and working closely with the Irish Government in IT related ventures, it was clear that Perera is still closely connected to his Sri Lankan roots and very passionate about developing industry. He pointed out that the Irish and Sri Lankan attitude towards their innovations were similar, in that, there is a sense of modesty when promoting ideas that can be conveyed to investors as a lack of confidence. He stated: “It’s a question of believing that we can do it. One of the things in common between Sri Lanka and Ireland is that they generally don’t like to sing their own praise or have the confidence to believe that they can create something big.” It’s all in the attitude He then went on to point out that the attitude is different in countries like America where there is a lot of confidence that an idea may be the ‘next big thing’. This is important because even though the idea behind the startup is important, confidence is the less obvious and yet even more important criteria that investors tend to look for. “Often people say it’s about the technology or the team and all sorts of other things but very rarely do they say it’s about you. When someone is coming to invest, remember that they’re investing in you. You are the person they are looking at and saying, ‘can we trust this person, does this person have the passion to make it happen?’ and only then do they think, ‘is this a good idea?’” Building connections According to him, it is also important to start building connections even before the company is ready to invite investors into the company. He spoke of how he constantly worked to remain relevant rather than to make a seasonal attempts at building his network. He said, “One of the things that I learned was that my colour was a huge advantage and I would go to a room and people would recognise me. Very quickly people thought I was a ‘somebody’ because they were seeing me everywhere. We created the impression that this was a company that was really going to go places.” Also when it comes to second of third round of raising funds, he gave advice on timing saying, “It’s easier to get money when you have money. Don’t be afraid to have more money than you need because it’s easier to negotiate your terms. And don’t wait till you run out of money to raise more money.” Also when making an exit, entrepreneurs should be ready to act quickly and have all the paper work ready if a suitable offer is made for the company. Perera pointed out that too many opportunities for a profitable exit are lost by entrepreneurs because of inaction or delay in the paperwork. “Acting quickly is also important. When there’s money on the table just take it.” The session was followed by a question and answer time when the audience was given an opportunity to pick the expert’s brain on more specific issues that they may have encountered. During this time, Perera also commented on the risk that many people may associate with entrepreneurs saying: “People think that entrepreneurs are risk takers but really they are the people who know how to minimise risks.” Crowd funding He also added his thoughts on how SLASSCOM in collaboration with the Government may support future startups by providing funding through crowd funding. Crowd funding is an emerging method of funding for start ups, and has created many successful ventures in the western world (such as the Kickstarter campaign for the ‘Pebble’). It also provides excellent validation for the company and gets the public excited about the product. As he advices: “I think something SLASSCOM should look at is the area of crowd funding, and also get the Government involved in funding startups through such platforms. I’m working closely with the Irish Government that uses this method. If Sri Lanka has such crowd funding platforms, the Government can start promoting such funding.” Pix by Upul Abayasekara