Fundraising isn’t about your pitch: Lessons from Eneza Education
FUNDRAISING! Everyone’s favourite topic of conversation when it comes to startups. How much money did they raise? What’s their valuation? Who did they get their money from? These are conversations I often overhear while working from our office in the m:Lab East Africa.
To share a bit about my fundraising experiences with Eneza Education: to date, we’ve raised over $550K in convertible debt and equity capital and we’ve won over $180K in competitions and awards. Savannah Fund is one of our earliest investors and supporters.
My biggest lesson learnt can actually be summed up in one word: COMMUNICATE.
But, to give a bit more background, I’ll break out my lessons learnt into 5 main themes:
- Fundraising isn’t about your pitch. It’s a relationship-building process
Would a girl (or guy) marry you after your first pick-up line? No. They have to get to know you first. Sometimes, it takes a short amount of time – sometimes years.
It is a wonder to me why many entrepreneurs think that investors will give them a yes after simply “pitching” their idea to them. Well, I have news for any budding entrepreneur: Investors don’t invest in ideas; they invest in you. And in order to get capital from their pockets and their signatures on a term sheet, you will need to build their trust over time.
Investors want to know a lot about you. Why is this idea important to you? What is your track record of success? Are you relentless? Dedicated? Skilled? Able to influence others to join your team?
I find the best way to do this is through a monthly email update to potential and current funders. After showing us how to do this at the Unreasonable Institute last year, I’ve tried my best to update everyone on what’s happening with product development, traction, revenue, marketing/sales, and building our team. I also highlight our greatest needs at the given moment, in hopes that someone in our network may help. My updates are very detailed (and cathartic for me!). One of our newest investors committed to funding right after we announced we were fundraising. He told me later, “I knew everything that was happening because of your updates. Keep it up!” This goes along with #5. COMMUNICATE!
- Ask potential investors for help. And truly, genuinely mean it
Investors are interested in your business because they want to know they can add value. If you show them they can add value before they even invest, they get excited about your business. And when they get excited, they become more devoted to your business. If an investor feels they can add value beyond capital, both of you will enjoy working together. We have been courting an investor for a while now, and I had a brilliant conversation with him about our marketing strategy. I’ve never had so many aha’s in one meeting. Coming back to him with how we implemented the strategy he and I brainstormed is my next step with him.
(Toni, right, with an Eneza Education team member)
- Look for fit, not just for capital
Not all investors are a good fit for your company. I have criteria I look for when it comes to Eneza: 1. Investor has to have high interest in Africa and has usually lived in or travelled to the continent before; 2. Investor must have interest in technology, education or both. Caveat: there are many field-specific investors that only go for particular sectors. You should still meet with investors that are not particularly interested in your field — they can help expand your network and still give good advice.
Also, sometimes your business model or target market changes. And then *poof!* You’re suddenly a good fit. (Example: We had no intention of incorporating microwork into our business model. After altering our marketing strategy though, it just happened. Now, we’re a fit for investors that we weren’t a fit for in the past.)
- Cast your net wide
As a lady, I often have a hard time doing this. Society teaches women devotion and ‘sticking to one person’. In the beginning, I often mimicked this while searching for investors, only looking for one at a time, weirdly enough. Don’t commit yourself to one investor too early. Play the field. See what’s out there and make your decision based on this.
- COMMUNICATE often
I can’t stress this enough. Even if you have to send yourself reminders to communicate with potential investors often, do it. They want to hear from you. Don’t hide problems about your business from them. Tell them everything. Ask them questions. Text them thoughts on your newest revenue stream. Email them about a competitor you saw pop up. They want to know that they: 1. Can work with you. 2. Can trust you.
Obviously, there are more lessons I’ve learnt. But, this is the advice I wish I had 3 years ago. Hope it’s helpful to others, or just a good reminder of what we all should be doing as entrepreneurs. Writing this even made me want to go and email 3 potential investors of ours right now…
Toni Maraviglia is the co-founder of Eneza Education. Eneza is a virtual tutor and teacher’s assistant on low-cost technology that aims to make 50 Million kids across rural Africa smarter. Follow @EnezaEducation and @tisfortoni for more details.