Raising investment is a common concern for many startups. As Bangladesh’s startup ecosystem grows and as we are seeing more and more serious early stage companies, funding is becoming a matter of growing importance.
How to raise money has become an enduring question among startups in Bangladesh. Raising money is hard. It is harder for startups in a nascent ecosystem like Bangladesh where funding culture is yet to mature. Being said that, Bangladesh is making progress. The country has got its alternative investment act recently and there is a growing VC industry with local and international VCs showing growing interest in the market.
Although startup fundraising is a well-discussed topic, there is no one size fit for all. It is more so for a market like Bangladesh where startup funding is relatively new. However, we can definitely learn from people who have walked the path and have experience of raising investment.
Recently, in an interview with Future Startup, Chaldal CEO Waseem Alim shares his experience and wisdom on raising money. Chaldal has raised money from a diverse set of investors from the Valley, China, and Bangladesh and is a YC company.
Lightly edited transcript of his advice.
Before going full throttle on fundraising, one needs to understand the basics and explore some pretty simple questions like whether the product-market fit is there, how much one needs to raise and for what purposes, and whether one needs the money right away or can wait for a while etc.
Back to the basic
First thing is that, forget about fundraising, instead, ask yourself whether you want to do this. Do you have a good product? It is critical to get the product tick before going for fundraising because you are still not at the stage where you can go and ask people that you want to do a startup and people will give you money. That is not the stage Bangladesh is in right now.
That has happened in many countries. In India, it is very easy to raise money for the last two years. But that is not the case for Bangladesh yet.
So you must have a product, you must understand why you need the investment and then you need to figure out how to do it.
What I’ve realized is that you probably need less than what you think you need or you probably need more than what you think you need or you probably don’t need it right now.
You can always do with less. The best strategy is that try to do with less now because if you can do with like little money and do a lot with that, then investors will think that they did so much with so little money. If we give them one briefcase of money, then they can do so much more.
It is all about input and output. If you can show them that without any input you have done a lot, it is always attractive.
Raising money in Bangladesh
You need to find out where the Bangladeshi VC industry is, who are the movers and shakers.
There are a lot of VCs that are coming into Bangladesh nowadays. I don’t know and haven’t thought about the angel level funding so far. I know some people are doing personal investment these days.
I think there is more confidence in the market these days, so it’ easier. It is hopefully going to get easier and easier if we have some more success stories.
Ask for money and get used to rejections
First thing is that you have to know where to raise the money from. Initially, it is as simple as going to people and asking for money. There is no more magic to it.
You have to ask people, you have to do the hard work. You have to take the rejections and then try harder.
Momentum is important
You have to build up the momentum, if someone wants to invest 1000 taka, let them invest 1000 taka. High targets are fine but sometimes those can be the reason for your failure.
The truth is that, whatever I aim to raise, I end up raising 30% of that. That seems to be my law. If you want to raise a billion, you should really target for 3 billion.
Excerpt from an interview with Waseem Alim of Chaldal.