Raising money for your venture is not easy. It will take enormous amounts of patience, determination, and persistence. Nevertheless, it is also an extremely rewarding process that will teach you a lot about yourself, your business, and your market.
This guide is a high-level overview of what you need to think about as you grow and begin preparing for fundraising: the general processes involved, the documents you need to have, what types of investors are out there and the instruments they use when funding companies. We include insights gathered from investors, entrepreneurs, and others in the Sudanese ecosystem, so you can learn from the people who have successfully raised money in the past, and who are looking to fund companies today.
Every company’s fundraising process is different, and the stage at which you approach investors will also be different. But, by distilling some of the most salient points from our conversations, we hope this guide will serve as a good starting point for entrepreneurs on how to fundraise.
Furthermore, by providing a directory of potential funders and detailed information about them, we hope that you as the entrepreneur will have a better understanding of the different types of funders in this market, their average investment size, and the sectors they are active in. While this is not an exhaustive list, it does highlight some of the key players in the market and shows the sort of information you need to know before you approach investors for funding.
- Do research on the investors you approach: you should find someone who is a truly good fit.
- When approaching investors, introductions are best: try to meet investors at a pitch event, a conference, or through one of their portfolio companies.
- Enter accelerator/incubator programmes: while they may not be a great tool for every entrepreneur, they will help you get exposure and learn how to think about your business.
- Know your market: you should be able to explain not only the intricacies of your market, but also challenges you foresee, the offline aspects of your business, and back up your assertions with facts.
- Know how much you should look to raise, and why: do not ask for a million dollars just because it is a round number; do your research, and explain how this round of funding will get you to your next key milestone, and where you will go from there.
- Do not raise too much money too quickly: if you cannot keep raising your company’s valuation in future rounds, you will likely sputter and burn out.
- Local vs. international investors: Sudan is opening up for International Investors – do some research and find out how they are different and if they are a better fit.
- Consider impact investors: this may be a good fit with your company, or it may not; think hard before you approach impact investors whether you have the capacity to report metrics they will want to see.
- Promote trust: investors are wary of entrepreneurs who are not serious about their companies; find several credible references (professors, mentors, employers) who will vouch for you if a potential investor arise.