Post on 26-Aug-2014
description
Fundraising in Pakistan
Muhammad NasrullahFounder and BDFL at Pring
Twitter & Pring: @nashFacebook fb.com/nasrullah
Talking About Local Fundraising
• Raised in excess of $2M to date• Summary of my experience
Caution
• Fundraising sucks• It’s a necessary evil in most cases• Best advice to you: Avoid Fund Raising (if you
can)
The Early Days of Entrepreneurship
• Think US in the 50s or 60s
Capital is Expensive in Pakistan
• Less equity for more money
Before you start fundraising
• Use money from family, friends and fools• Bulid a working prototype• Get user traction and demand• Once you have the traction figured out,
fundraise for scale
The ultimate goal of a startup?
• To become a profitable business with a repeatable, scalable business model
Think Revenues
• People, Products and Profits• If you plan on staying in Pakistan, reach
breakeven as soon as possible
Why Breakeven?
• If you’re working on funding, there is always an end-date to that funding
• Once it ends you’ll have to raise more again. You’ll be at the mercy of investors and worse, you will be desperate
• If you are breaking even or profitable you can fundraise at your time at your benefit
Who do you fundraise from?
• Look at successful people in your field• Self-made entrepreneurs will understand your
pain the most and will empathize with you the most
Look for SmartMoney
• Dumb money: is just money• Better: money from someone who can be a
great mentor• Even better: someone who has the
connections to make your startup successful• Even better-er: Connections, know-how, self-
made entrepreneur, well respected in the market and has money
Actually: Avoid Dumb Money. Keep as Last Resort
• Do you really want to ‘owe’ the seth 5+ million rupees?
Go breadth-first rather than depth first
• Ie: talk to everyone at the same time• Do not do approach one-by-one, you will
never build up momentum• The best way to speed any negotiation is to
introduce competition• It’s fine to be talking to upto 30 parties. I did
40 at one time.
Fundraising dirty little secret: It’s heard mentality
• The toughest part is getting the first yes• Once you have one popular person saying yes,
the other investors will be keen and more interested
• This works well if the first funder is well-known
• No, not a verbal yes, a check is great
How Much?
• Capital in Pakistan is expensive• After the FFF round, the next is a larger round but you
will probably will have to raise more money later. • But do not give away more than 50%, do not lose
control. • Corollary: avoid investors who ask for too much equity
and control. It’s a huge warning sign.• What’s your exit strategy? How many rounds of funding
will it take to get there? Keep atleast >20% when you reach there
How?
• Get a good intro before meeting the investor• Go in for an informal talk and leave with a
one-pager executive summary• Some investors will require a slide deck, keep
it handy
What should I talk about?
• Elevator Pitch• The Problem• Solution (Demo)• Business Model and Market Size• Secret Sauce (aka competitive advantage)• Competition, marketing• Team• Deal Terms (Money, equity etc)
Great Deck Samples & Guides
• Sequoia: http://www.sequoiacap.com/grove/posts/6bzx/writing-a-business-plan
• Dave McClure: http://www.slideshare.net/slidesthatrock/how-to-pitch-a-vc-redesigned
• Pitch decks of popular companies: http://PitchEnvy.com
Parting Thoughts
• The number one job of the entrepreneur is problem solving
• Fundraising is a problem and a unique one in Pakistan
• Your company’s success relies upon you hacking fundraising
• You will get constantly rejected. Don’t take it personally. Build emotional resilience.
• Very few say ‘no’, most give the long silence
Good Luck!
Questions?