Two Useful Rules For Startup Fundraising in 2020
Post-WeWork and Uber IPO coupled with the changing perception about the broader tech industry and the changes in the global economy, the thesis, and expectations around startup investment have changed significantly.
While good companies continue to enjoy relatively easier access to capital, the requirements and priorities from the VCs and investors, in general, have changed.
Today, investors are more concerned about the fundamentals of a business. More concerned about the business model. More concerned about your ability to make money. More concerned about your ability to grow without throwing money into buying growth with discounts and offers.
In an interview with Future Startup Wes Schwalje, COO of Dubai-based Tahseen Consulting, one of the investors in Jatri, echoes the changing reality of the market and shares his tips for founders raising capital in 2020. Below find two fundraising rules for founders in 2020 from Wes Schwalje:
Growth is important but profitability matters no less: “In a post discount and subsidy for the market share era, being able to turn a profit on each sale is critical to achieving the milestones necessary for the next round of funding at a higher valuation.”
Get your business model right: “In addition to a stronger focus on unit economics, entrepreneurs must be able to clearly explain how they make money – you never want to be in a situation where a VC has to ask you how you make money. We have been on the investor side of the table and the capital-raising side of the table with clients, and it is shocking how many entrepreneurs stumble on this question.”
Go Deeper: Read our long-form interview with Wes here.
Ruhul Kader is a technology business and technology policy analyst based in Dhaka, Bangladesh. He is also the co-founder and CEO of Future Startup and author of Rethinking Failure: A short guide to living an entrepreneurial life. He writes about internet business, strategy, technology, technology policy, and society. He can be reached at [email protected]