Two days ago, we have officially started our fund raising process by reaching out to 25 interested parties. As there is a lot of confidentiality involved with this process, I won’t be able to share much of the details publicly. I do however, want to share our experience during this period as much as I can, while keeping confidential information, well confidential.
Long story short, I have sent out our updated Executive Summary and Pitch Deck to our potential investors. Some have provided great feedback and interest immediately, and others have promised to revert back to me within the next couple of days.
7 Follow Ups
Of course, you should never wait too long for someone to get back to you. As an entrepreneur who is looking for funding, you’re basically a B2B sales person, but you’re selling your company, product and vision, instead of a service or a product. A lot of research had been done on sales techniques and in terms of “follow ups” a rather important statistical fact has emerged: It takes on average about 7 follow ups with a prospective party to sell a product or a service to that party. Of course, sales cycles are very different for enterprise products, consumer products and especially for fund raising. However, the main message to take away from this, is: Always follow up. Sometimes, the party you’re communicating with, is just busy and perhaps has forgotten about your message. Sometimes, they just didn’t understand your message at first glance and they deferred to process it to a later stage. Perhaps they have disregarded your message because they’re not interested right now. Doesn’t mean they might be interested later, right? Or perhaps the most silliest of all things happened: your email just went into their spam filter and they didn’t even get to read your message in the first place. There are so many possible reasons that do require a follow up on your side. So again, always follow up. My follow up schedule, for example, is about a week after I last contacted a person. So that’s what you can expect from me.
Experience in Raising Funds Successfully – and failing to execute
Of course, an executive summary and a pitch deck is by far not enough to provide to investors. You got to get down to the nuts and bolts and make sure your plan of going forward is rock solid. In the end, it is all about the alignment of capital to milestones.
Luckily, we have a bit of experience in fund raising. While we’ve done it once so far (all other companies were successfully bootstrapped) and the main work was done by our third co-founder at the time, we still have some resources we can look back to. This helps in getting the right papers done, covering the important topics. Back in 2012, we had this crazy startup called TreeCrunch, which did natural language processing of answers to open-ended questions. The founders funded the company with a significant amount, we got some grants from some organizations locally and we raised a pre-seed round of about USD $100,000. We have made a lot of mistakes in that process; especially at the time of running the company. We probably asked for too little in terms of funding and after that round, we didn’t continue to raise funds early enough. At the same time, our product and service roll-out was delayed and our customer acquisition funnel was not very successful in turning 30 mostly Fortune500 trial customers into paying customers. Thus, TreeCrunch ran out of money and had to cease operations. Lessons learned: raise enough and make sure to offset your cashburn as early as possible by generating revenue.
Why We Raise
Let’s fast forward 3 years and get back to swapit today. We have learned our lessons from that failure – and I am happy to tell anyone more about that and others over a beer. Now it is about time to get swapit kickstarted.
Swapit is essentially a marketplace app. Every marketplace lives from its marketplace liquidity, i.e. surpass the critical mass of demand and supply. We are at the forefront of marketplaces for pre-loved items in Hong Kong and our technological approach is superior to all of our competitors, regionally and internationally. Yet, that all does not matter if there is no liquid marketplace with active trades happening. We have worked hard to get to the point where we are right now and we are coping well with the ever increasing numbers of traders and transactions.
In order to continue growing at an exponential rate, we need to invest heavily in our marketplace liquidity. That includes fostering and nurturing our community of existing traders as well as attracting new traders to our platform. Therefore, we are planning to spend roughly 75% of the amount we are raising on building that marketplace community. This includes attending & sponsoring events, exhibitions, running events ourselves, attend & exhibit at street markets, as well as general marketing efforts like advertising (mobile, social, offline, print) and merchandise. All that is coupled with incentives to socially share their engagement with swapit and spread the word virally across different social media to their social circles.
Furthermore, swapit is currently Android-only, by choice. While the majority of our target audience are Android users, we do also have a large audience of interested folks who have an iPhone / iPad. Thus, roughly 20% of the funds we raise will go towards creating an iOS app.
These combined efforts entirely focus on capturing the Hong Kong market to its fullest extend. We believe, the funds will be sufficient to achieve those goals and be the dominant marketplace for pre-loved items in Hong Kong. To accomplish that we need to stop walking and start running. Running fast! Perhaps you’d like to take that leap together with us?
Interested to know more about our funding round?
Send me an email to [email protected] and I am happy to send you some details directly.
Haven’t tried swapit yet? Download it from http://get.swapit.la