Securing investment: A MENA founders viewpoint

LinkedIn is my personal go-to source of information, a curated alumni of experts, industry peers, and thought leaders. Following the recent successes of many startups in this region and specifically within the mobility sector, is compelling, empowering even, yet, also raises some questions. With MAGNiTT highlighting some massive successes, other mediums promoting the unicorns of turn, and the power KSA demonstrates in innovative investment strategies, Abu Dhabi Global Market (ADGM) and Hub71 recently leading the announcement of financial innovation, it really does amplify the power of collaboration.

Most of the questions when raising capital start with “how”, I have been delving a little deeper into the understanding of raising capital (as we’ve been on a journey for the past few months).

I’m not writing this entry as a 101 guide to raising investment, I’m not qualified. Since being on this adventure, I’ve been approached by many to share my story and progress. It is a quagmire of discovery, it is also not the only route you should be taking. You have to prove to yourself and your customers that your business is needed. My stance is “if you prove your business and meet milestones, then you can at that moment, decide whether or not you want to accept the investment interest you’ll receive”.

When I started ONE MOTO, I never sought a want to raise investment, I believe that to build a successful business, the foundations should be ‘growth through sales’ a simple business model, yet a somewhat antiquated philosophy during these times?! I was mistaken, it was an oversight on my behalf, albeit a positive one.

How? Well our market study and meticulous research into the need for Electric Vehicles, the want of a ‘switch’ to a cleaner state of mobility was very apparent, yet I had not foreseen the traction we would create so quickly. Our research turned into a published white paper “Mainstreaming Electric Mobility in the GCC” and evaluating the wants from our potential customers, led to a much faster growth curve than we had anticipated.

Something to note, many VCs receive in excess of 1,000 pitches a year, to which they may invest in 3-4. So the odds are against you, unfortunately, “no” is a far easier notion to offer you. I’m not a comfortable recipient of “no” so I reflected, maybe it was our pitch: “The UAEs first and only approved EV manufacturer, wanting to raise to meet demand and growth”. Was this enough? Apparently not. My network was later opened to a prism of Angel investors - predominantly those taking a higher risk at a smaller stake – if the appetite is too small, avoid this route, as you may fall short.

One Angel I met helped me a great deal, he has since become my go-to for advice, soon into our first conversation he claimed, “it’s like being asked to invest in Tesla back in 2003”. I was humbled, and I share this quote as a reminder that we can see the road ahead of us.

Look towards PR

As a startup, you might not have the ‘spare cash’ to spend on PR, understandably, and also you might not know which agency/individual to trust with your broadcasts. However, it is an investment, place either the time or the budget to commit to surrounding PR. Try to build a network of journalists and understand how to get your stories published.

Please consider, as you are meeting new people (investors and their associates) they don’t know you, they do not know your vision and may not know your industry, you need the stories to showcase, answer questions and compose a compelling series of messages surrounding the founders, the industry and indeed your business. You don’t need to be marketing yourselves (direct), let the PR and others talk about how great you are (indirect). If you get the attention of this new network of analysts, investors, and executives, these PR pieces help tell other parts of your story (you might not have had the time as you were focusing on the pitch).

Provide a focused insight

Even though you have the roadmap firmly in your head, you can vividly see what the next 3, 5, or 10 years look like. It’s because you live your idea. Don’t expect anyone else to get it so quickly, this was a fault in the early months of our discussion. Offer investors a tailored, bite-sized, and extremely focused insight into your business and if they have questions about the future, you’re already prepared with the answers. If they don’t ask, don’t share (not yet).

Tailor your pitch deck

My advice is to tailor your pitch deck to whom you are presenting - research their fund mandate, the lifespan of their fund, and see if they have invested in other businesses similar to yours and if not, why not.

Try not to see yourself as ‘asking for money’ this isn’t the impression you want to present, we know this. You have an opportunity for an investor to make a great return on their investment. Show it. Prove it. Be confident yet humble and conservative, under-promise, and over-deliver in excess.

Plan effectively 

Creating alternative opportunities and options is key to progression, especially if like me this is your first rodeo. Do consider this: “Are you looking for a cash injection or smart investment?” An investor may just be a cash investor, but would you prefer a resource and expertise package? Would the business progress quicker with the right team alongside you?

The past six months of online meetings have been incredible and I feel somewhat fortunate that Zoom has become a respected way of communicating, a structured agenda of discussions opens up easy conversations on a global scale very different from previous years.

Stay focused

With so much opportunity, it can lead to an endless array of excitement, but don’t lose track of where you started and the original focus.

They say “raising capital is a full-time job”, and it can be if you let it. I would recommend reading the '4-hour work week' and see if you can “batch” your updates and conversations to ensure everyone you speak to stays up to date with your progress and you can continue to run your business.

After several months of meetings and ‘progressive waiting’, I asked more questions surrounding investment and the different avenues. One of them led me to Eureeca, an equity crowd-funding platform, intrigued I began to research the backgrounds of the company, and more importantly the people behind the brand, as a team of highly successful investors and business people, I convinced them to listen to what I had to say. I had the belief and needed to showcase ONE MOTO being a business for crowd-investment. We suited their mandate and fortunately, we were selected.

Progression can determine value 

How do you value a company? It depends on who you ask. So ask everyone. Sales, DCF, MVP, Market, Founders, all appreciated, yet it holds the same equation as how much does something cost? It depends on how much you’re willing to pay for it. Milestones of progression will demonstrate your true value, allowing you to dilute less equity, maintain the focus and vision of the business. After all, it is the execution that promotes the value.

The killer question

My closing point which has caught me out a few times, is this one simple question “what do you want from this business?”. The way to answer it isn’t straight forward, you should know what your motivator is in general: wealth, making a difference, notoriety, a Nobel prize? Whatever your driver is, make sure it is true, candid, and explored. If your plan is to exit at Series B, then state this, and when asked why, you’ll have the pre-thought answers on hand.

When you read the seven/eight-figure raises, let it inspire you, not deter you from continuing. Plus, my casing point on this; right now, do you need an eight-figure injection? What would you do with it? Don’t fix yourself on this, think about what you need right now and what’s a nice to have. 

Raising capital isn’t easy, nor should it be. Present a value add to an investment portfolio, make sure you are solving a problem, or solving a problem better than others, and you’ll get there.

Are you a startup looking for investment? Apply for funding to 80+ investors now.

Despite a rocky first half of the year, Saudi Arabia’s startup funding increased by 102% from H1 2019 to H1 2020, with H1 2020 already surpassing full-year 2019 by the amount of funding. Discover more data by downloading our FREE H1 2020 Saudi Arabia Venture Capital Snapshot.

هذا التقرير متوفّر أيضاً باللغة العربية على الرابط التالي: تقرير الاستثمار الجريء في المملكة العربية السعودية في النصف الأول من عام ٢٠٢٠