Yes, we are (fishfishme.com) in the process of raising our second round of funding. We are raising US$200,000 and we already have 50% committed (that means we already raised $100K). The purpose of this post is not to invite you to invest on us (well maybe you should because we will make you a millionaire), but its to share our learning’s during this process.
As you might know by now, I’m an open guy, I like to share everything so that everyone can benefit and learn. However, I believe you’ll understand that this topic is a bit sensitive, but I’ll try to share as much as I can without screwing up the deal.
First, let’s talk about why we decided to raise money in the first place. As a startup with four full-time employees (Jose, Miguel, Christian and myself) you can imagine that most of our costs are going into salaries. During the last year we managed to survive by raising US$50,000 back on Oct 2012 from a Kuwaiti investor.
Now since business is going well and growth opportunities lay on front of us, we would like to hire more people and grow the business. We are still in an early stage and our revenue at the moment is not sufficient to grow the business to go after these opportunities, thus if we want to take this road we should raise some money.
Now the problem is where to find these investors that want to invest in such a startup. Well usually at our stage we will have two options:
1- Approach Angel investors (wealthy individuals that invests in risky startups)
2- Venture Capital firms (also known as VCs).
Now which one to approach depends on the size of the round (the amount of money you are asking for). So for our round (US$200k) we are kind of in between, but more skewed into Angels. Some will ask how did we came up with the amount we want to raise, good question. There is a general role that you should raise an amount that helps you survive 12-18months. So lets say your monthly expenses are $10,000 (after the round) then you should raise between $120,000 to $180,000. There is a great post about this by Fred Wilson here. Nic Brisbourne (famous British VC) has an interesting view as well and I had a small discussion about it with him here.
So let’s say now you know how much you want to raise, next you need to find these investors. And for this I’ll tell you what we did. First, don’t approach an investor directly without having someone to refer you to them. So don’t go to a VC website and submit your business plan. That rarely works. You need to know someone that knows some investors that can hock you up with. For our case we approached three different groups with three different strategies:
1- Kuwaiti Investors: Here I asked for help from our StartupQ8 community and got lots of support, especially from one guy that without him I think we will be completely lost. (If you are a Kuwaiti startup then please reach out to one of our community members and we promise to help).
2- AngelsDen.com: that was an event I did and helped in organizing to help entrepreneurs raise funding. The idea is simple, it’s called Speed Funding (yes, similar to Speed Dating). You have 10 min to pitch your idea before moving to the next table. More about that later, but from this event we met a lot of Angel Investors interested to invest in our startup.
3- Mentors: Omar Koudsi (our mentor) put us in touch with one of the most recognized VC investors in MENA region and now we are in talks with them.
We are still in the process of raising the round and I must say it’s not that easy and it’s very demanding. I actually think a big part of the process is a waste of time, the time we spend raising money should be spent with our customers, partners and in growing the business. I wish we can close the deal as soon as possible and go back and refocus on our business. Wish us good luck!