Five steps to fundraising on VC4Africa
I am one of the several mentors of VentureCapitalForAfrica entrepreneurs. I believe in the innovation & potential power of Africa....
If you have a venture profile registered on VC4Africa you have the ability to raise capital. Here is an overview of how to prepare yourself for a fundraising campaign, the next step needed to connect your business with investors part of the VC4Africa Investor Network.
Prepare your venture
Before your venture is put into fundraising mode, it is important to post documents to your venture profile. This gives investors an opportunity to do a first assessment of your business and is required as part of your fundraising application. Before a fundraising request is approved, you need to upload a copy of your Chamber of Commerce registration (or certificate of incorporation), a business plan and sound financial projections. To improve your chances, add Letters of Intent from strategic partners, or contracts with existing customers, etc. Add relevant media that helps to give an impression of the company and team. Only investors registered as part of the VC4Africa Investor Network can access these documents.
Also make sure to
add team members and advisors to your team page. As part of this process, you will be asked to complete the
VC4Africa Quick Scan . This is a straightforward questionnaire to help you check your investor readiness and to identify any points that need to be addressed before investors will take you seriously. When you’ve completed the Quick Scan upload it to the documents section of your venture profile. The VC4Africa team provides investors with a pre-assessment of your venture and it is important you provide us with the most relevant documentation when you apply.
Register your intention
Given the results of the
VC4Africa Quick Scan, the next step is to register your intention to
raise a round of funding. You need to indicate the financing stage – Seed, Start-up, 1st round (Series A), 2nd round (Working cap), 3rd round (Mezzanine) and 4th round (Bridge). You also need to indicate the financing type – Equity, Debt or Hybrid and your capital needs (between USD $10,000 and USD $1 million). Your registered intention is reviewed by the VC4Africa team. Once approved, your venture is added to the list of ventures fundraising on VC4Africa. The next step is to garner investor interest and secure a
lead investor. Post updates and progress to your venture profile showing you are on your way to achieve the milestones indicated in your documentation. Investors who are interested in your work can express their interest to join as a possible lead investor.
Engage potential lead investors
If you have done your work and your venture clearly shows traction, you will hopefully secure interest from a number of possible lead investors. You can engage them and work to understand the differences between them. It’s up to you to decide who is the best investor for your business and agree to a fair term sheet. Do not approve the lead investor until you feel confident about the terms of the deal they are offering. If they have not made the investment into your business, you can ask them to send a bank guarentee showing they have the required capital on reserve. When the lead investor is approved, you can upload the term sheet to the documents tab on your venture profile.
Raising capital
Once a lead investor is secured, the venture can go into “Raising Capital Mode” for 90 days. At this stage, investors registered on VC4Africa can review the term sheet and express their interest to participate. They can outline how they plan to contribute in non-financial ways and any terms or conditions they might have as part of their participation. The amount of capital pledged by each investor will appear in the progress bar indicating your venture finance goal. At the end of the 90 day period, copies of these pledges are sent to the entrepreneur and lead investor.
Closing the deal
At the end of the 90 day period it’s time to close the deal. You will receive copies of the registered intentions and can follow up with the lead investor to close the financing round. Once completed, the venture is put back into building mode. Update your network on progress and make sure you maintain the foundations needed to raise additional capital in the future!
