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What A Business Must Know Before Fundraising

Every business requires funds. Either as a start-up or an existing business, there are plenty of ways for you to raise funds. This article will cover what you should know before fundraising and an exclusive webinar recording which features industry experts filled with insights.

Before You Fundraise

Understanding the purpose of raising funds is incredibly important. As such it is recommended that business owners looking to fundraise understand what their funds will be used for. This can not only help you further understand your fundraising purpose but convince investors to invest in your business.

Here are a few things that you should prepare before looking to fundraise:

  • Credible and truthful financial documents of your business – past and present.
  • Your business model.
  • Your business strategy to utilizing the raised funds.
  • Knowing your key hires
  • and more…

You should also be ready to commit time and effort to manage your investors. Although some might prefer to get only 1 individual investor to minimize conflicts/time dedication, we recommend diversifying to multiple investors. Find out why below.

What types of investors should you engage and why diversify?

Government Grants

Grants such as the Market Readiness Assistance scheme or Enterprise Development Grant could potentially help you raise equity-free funds. As they are funded by the government, you do not have to worry about managing investors’ alignment or agreements. The only caveat is that not every business can qualify for certain grants. To know whether you are qualified feel free to read our articles above or consult us on the fundraising process.

Angel Investors

In Singapore, angel investing is one of the most common ways for a company to raise capital. A wealthy individual who is prepared to invest in start-up businesses or firms is known as an angel investor. They put their money into high-risk start-up businesses in exchange for a portion of the company. Business angels might work as part of an angel network or on their own. Individual angel investors in Singapore can raise between S$25,000 and S$100,000, while angel networks can offer large sums of money.

Venture Capitalist

Venture capital is money supplied by investors (venture capitalists) to help a company start-up or expand. These funds are provided by venture capital firms that specialize in constructing high-risk portfolios. In addition to providing funding, venture capitalists also provide guidance on how to increase a company’s profitability. Venture capitalists expect a high rate of return when they invest in a company, with a typical estimate of 25%.

Incubator/AcceleratorFor Start-ups

Start-ups in their early stages can also look to join incubator/accelerator programmes. Similar to Venture Capitalists, incubators/accelerators often assist start-ups in guidance and offer them funding. This is an easy way for businesses starting out to quickly grow and fundraise. For more information on the difference between incubator/accelerator read our article here.

Crowdfunding and others

There are also other forms of fundraising such as crowdfunding, debt financing or Initial Public Offering, that will not be covered in this article. The mentioned fundraising methods above are usually the most common ways for Singapore businesses due to the features of diversification.

Why Diversify?

When engaging investors, it is wise to have multiple investors such as a network of angels or venture capitalist(s). The reason is that having multiple industry professionals not only allow you to have access to networks and guidance. They also make your business look more credible for future fundraising efforts. Look to engage in investors that are well aligned with your business model/industry in order to fully benefit from your fundraising campaign.

I am looking to fundraise and I wish to learn more

Take a look at a recording of our Webinar – Elevate Your Fundraising – Featuring industry experts from Carta, Aspire and Fintech Angel Operators to get a deeper understanding on the fundraising process. Alternatively, you can set up a meeting with us here to get to know how Crystal Clear can assist you in your fundraising journey