For ambitious entrepreneurs, ‘fundraising’ and ‘startup’ are attractive words. But they aren’t easy to put into action when building a business or raising capital.
Reham Fagiri, co-founder and CEO of AptDeco, a digital marketplace that has been coined the easiest way to buy and sell quality pre-owned furniture online, is a part of the small group of black women who have secured over $1 million in investor funding. Which, it goes without saying, is a big deal especially given the fact that female CEOs of color only secure 0.2% of investor funding according to a report by First Round Capital reported by the Harvard Business Review.
Fagiri has successfully raised money and she wants to help other entrepreneurs and small business owners secure funding, too. And before she joins us in Charlotte for the Entrepreneurs Summit in June to discuss the ins and outs of startup funding, she shared her wealth of knowledge for others to invest into their fundraising strategy as they seek to build their businesses and connect with venture capitalists.
“With fundraising comes commitment because now you have the responsibility to make multiple returns for these people who have invested in you. So, before you go out for funding it is important to figure out what kind of business you want to be in. Do you want to be the next billion-dollar business? Or do you want to build a business that is sustainable, profitable, and growing?” says Fagiri.
Informatively answering those questions can set you up for success as you begin the process.
“Once you decide that you want to do that, in my opinion, you have to commit the time because it is a distraction. You’re not going to be able to work on your business and also fundraise. Essentially, you have to prioritize what’s important for your business now. That’s why it’s key to have other people help you run your business while you’re fundraising and trust other people who can help support your business.”
Entrepreneurs, Fundraising Is a Commitment
In the same way that fundraising is a commitment, it is also an indicator of where your business is to investors.
“You want to raise money when you don’t need it. Because at the end of the day people will be able to see if you’re desperate and they’ll have the leverage. Which means they can give you worse terms or maybe they’ll even say no,” says Fagiri.
And when it comes to hearing the two letters, n and o, that no one wants to hear, she says that you’ll have to get used it.
It’s really important when you fundraise that you know that you’re not going to be a good fit for everyone and not every VC or investor is going to be a good fit for you. So, it’s OK to know that it could be a “no” for now but not a “no” forever.
The Terms Matter
“No matter how desperate you are, you really want to make sure that you know what the terms are and you’re not giving up anything that you will regret.”
She also says that it is important for founders to remain in control of the destiny of their business at all times. And, you can do so by not solely relying on venture capitalists. “There are a lot of successful businesses out there that did not raise a lot of money or that didn’t need to raise money. So, decide how you want to build your business. If you can avoid having to raise money, it’s not a bad thing it’s actually a good thing.”
If, in fact, you do secure funding, it is critical to create an action plan so that you can properly map out how you spend your capital because investors want to yield fast results. In addition to that, you don’t want to experience a financial failure.
Financial Rigor Is Key
“You should have an 18 months runway. That means 18 months of capital for reserve that will last you 18 months,” says Fagiri. She adds that one of the most common mistakes entrepreneurs often make early on is over hiring and investing in marketing tools that don’t produce good returns. And to be on the safe side, Fagiri advises entrepreneurs to, “always assume that this is going to be your last set of capital. So spend it like it’s your last.”
There are so many layers to fundraising. If you want to learn more about startup funding and growing your business join us at the Entrepreneurs Summit in Charlotte from June 6–9, 2018.