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13 Things Every Startup Needs to Know About Raising Capital

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Bluedot is a success story out of Melbourne that to date has raised a total of USD $3.1 million in the two years that they have existed. Their recent round of funding allowed them to raise USD $2.2 million and was lead by Jeffrey Katz who sold his company, Mercury Payment Systems, for USD $1.7 billion.

Filip Eldic and Emil Davityan founded the company and have managed to revolutionise location-based technology that has been previously been dominated by providers that have a significant drain on the smart phones battery. In short, if you’re building an app you can add their technology and be able to trigger actions to the user such as payments or advertisement’s based off a geographic location, without their privacy being breached and having any personal identifiers of that user.

The guys have had success in being able to engage large US mobile commerce applications and Big 4 Australian Banks. They also have successfully completed live trials of the world’s first mobile tolling platform on Melbourne roads as well as being able to present their technology to the likes of Microsoft and Samsung.

After having a chat with them, these are their top 13 tips that all startups need to know about raising capital.

1. Consider an incubator program before seeking serious investment

Before you go out trying to raise a large amount of money you should consider an incubator program first, where you will typically be given a sum of money that is less that $100k to test your idea. In the case of Bluedot, they saw this process as fundamental because they were trying to sell their technology to a large, slow moving industry in the early stages, which would have burned a lot of capital trying out the idea.

Being first-time entrepreneurs without the experience, the incubator was able to point out the deficiencies in their business model that then allowed them to pivot their idea very early on.

The only consideration, that startups need to be aware with these programs is that you usually have to give up a little bit of equity although Bluedot believe they wouldn’t be where they are without it.

2. Decide if the valuation investors are giving you is fair

Test the market and see what investors will be willing to pay you and expect investors to negotiate very hard with you. It’s also important to know what sort of equity they expect in return for that valuation of your business.

It’s not uncommon for investors to offer you half as much as your initial seed funding. Try and benchmark your startup against global averages that can be obtained from websites such as pitchbook. They produce quarterly reports about global raises and how companies perform in the Venture Capital context and then you can take their valuation, reduce it a little to be conservative and then put a valuation on your startup that is less than the average. The advantage of this is that you’re making it look attractive to investors at the same time.

3. Be prepared to say no to more investment opportunities than you say yes too

Often you will sit down with investors and everything will sound fine until you get into the term negotiations and then realise that their idea of what the companies worth is a lot less than yours.

In these circumstances, be prepared to walk away and to have to do this many times.

4. You will need to engage multiple sources of funding before you find one that will invest

For Bluedot, they contacted between 200-250 Venture Capital, private equity institutions, and individual investors before they found one that met their requirements – they did this on a global scale in Australia, USA and Asia.

“It’s a numbers, game like anything else. Get the word out and try as many different leads as you can until you convert to a successful one. “

5. Be methodical in what material you give out to potential investors

You need to have a pitch deck and a two pager for an initial approach. The most important thing is to have your pitch deck incredibly summarised and very much to the point. You also need your pitch deck to talk about what you do, where your market is, your traction so far and your unique selling point.

Bluedot found that in a lot of cases potential investors depended a lot on the covering email with the first couple of sentences. This must be good and to the point, otherwise you won’t get them to read your pitch deck or the supporting material.

As a second step, if the investor had gone through those two things then Bluedot would provide them with a complete due diligence pack which contained every possible, conceivable thing about the business such as employee agreements, insurance contracts, sales pipeline, product descriptions, business plan, information memorandum, shareholder resolutions, director resolutions etc. This would be provided to the potential investor via drop box so that it was very easy for them to digest the business in the due diligence phase.

6. Getting your staff to contribute their own capital is not necessary

This is important because some founders ask their own staff to assist in raising capital by investing their own money into the startup. Staff are an important factor to the startup but not when it comes to raising capital, the main investment you need from them is their time, although, before taking on new staff you should always get them to show some skin in the game first. This can be achieved by them working part-time, contracting to you or even working for free for a period of time. They need to show some sort of dedication.

All the people that put in the least and asked the most usually never have enough commitment to stay through the good times and the bad.

7. What you do with the money when you get an investment is important

The first thing you should do if you get an investment is put it into a high-interest account or term deposit and then crack a beer or two to celebrate after. Clear a lot of the liabilities and get up to date with your bills so you have clean books.

The obvious thing to note is that investors will usually put something in the term sheet to stop you withdrawing large amounts of cash without board approval.

8. There is not that much difference between raising the money locally or overseas

A lot of startups focus only overseas when raising money, but it’s worth looking locally as well. For Bluedot, they were firm believers in raising money locally as well and successfully raised $1.1 million before they went offshore. Be prepared though that if you attract overseas investment, you could be asked to move the company over there. Whilst it’s not a must to do that it’s worth being able to know how to answer the question if it does come up.

If you are looking to the popular USA to raise capital one difference that you will see is that because they are fairly experienced in the capital raising industry, compared with other countries, their questions about your startup will be very direct and a lot better thought through. This means that you need to think through the aspects of your business a bit more.

The biggest goal with these conversations is to get to the first meeting and then sell your heart out. If you have done this successfully then hopefully you will get someone who buys in on the vision of the business.

The raising landscape in each country can be very different though. For example, in Australia its very easy to get up to $1 million or $5 million plus if you have the right business metric’s but if you’re trying to raise money around the $1-5 million mark it can be very challenging, so your better off going overseas for this level of funding.

9. Understand what investors are looking for in your startup

They are generally all fairly similar and are looking for where they can put their money and get the biggest return with very low risk. Things that can affect their decision are your team, current traction, the product, history and ability of the company, the size of the market and the competitive landscape.

You should never just rely on one of these and make sure you hit every aspect.

10. Give the investors a really good demonstration of your product

You absolutely must demonstrate your proposition and features in a simple way to investors so that they can relate to how it works and feels, without them having to go away and test it out for themselves. This is an important point because it can often be hard to demonstrate what your startup does and for Bluedot, their technology is not always easy to explain.

A great thing that the BlueDot team did was to use Webex instead of doing a Skype call with overseas investors so that you can share your desktop with them and really demonstrate the whole offering effectively.

11. The way you deliver your pitch to investors is important

Before you go the meeting you should spend some time, in the days leading up to the pitch, to read about the fund / investors / venture capital firm and where their focus has been. The focus of the fund is very important because your not just getting money you’re getting their expertise, their connections and their experience instilled into your business. On the day of the pitch you must make sure that your confident and fully prepared as winging it will most likely see you fail.

The first part of the meeting should be you asking them about where the focus is, what their previous successes have been and what they don’t like to see and then that immediately shapes what you’re going to tell them in your pitch that follows this conversation. The types of things that they might focus on could be customer acquisition metrics, intellectual property, servicing enterprise level clients or the market.

The first part of your pitch should be a short, concise, one-sentence summary of what your startup does and the benefit that you deliver. Then go into the rest of your presentation from there with demonstrations, etc.

12. Partnerships are important and will get you bonus points with investors

The partnerships are important because they provide you with extra revenue streams and eliminate some risk that investors might perceive by diversifying your fundamental business model.

A quality partnership with an established organisation can also show credibility and that someone else has confidence in your business so much so that they are willing to align their brand with you. Bluedot were able to demonstrate this to investors with companies like Braintree, who they had partnered with.

The only caveat around having this conversation with investors is that you must be able to clearly proof to them that they’re beneficial relationships and how the actual revenue streams work.

13. Demonstrate to potential investors the small wins early on

One thing that’s important to grasp when trying to raise capital, is that investors want to see a few wins early on. In the early stages, you need to run fast and try and win the business that is the low hanging fruit. This will allow you to raise the money so that you can chase the large, slow moving companies later on.

The typical sales cycle, to win a large business like a bank, is 1-2 years and so if you only have small amounts of capital, you can’t afford to waste time chasing these prospects early on. Investors will not be impressed if you tell them that you haven’t won any clients and that you are focusing on a few large sales that may or may not happen down the track.

Visit Bluedot’s services for more information about their company or follow them on Twitter @BluedotInnovate.

Tim is best known as a long-time contributor on Addicted2Success. Tim's content has been shared millions of times and he has written multiple viral posts all around personal development and entrepreneurship. You can connect with Tim through his website www.timdenning.com

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Startups

5 Hacks to Improve Your Writing Skills in English for ESL Learners

Phil Collins

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Studying in college is hard for everyone, but ESL learners arguably suffer the most. Moving to a foreign country, learning a new language, and keeping pace with the rest of the class may seem like an unbearable burden. It’s okay to feel overwhelmed, but you have to pull through and not give up. 

In moments like this, it’s always a good idea to seek help. Whether you go to WriteMyPaper to order an essay or just talk to a friend, admitting vulnerability is an important step towards improvement. In this article, you will find some tips on how to get better at essay writing, even if English is not your native language.

 

Control Your Environment

Improving your language skills is all about constant practice. Living in an English-speaking community is the first thing you should do to start your practice. It might be tempting to surround yourself with people who already speak a familiar language. However, this way, you won’t be practicing English on a daily basis.

You need to make those lessons almost intuitive in a way that you don’t have to do anything to learn the language. If you live in an English-speaking community, for example, if your roommate speaks English, you will have to practice the language, whether you want it or not.

Still, make sure you don’t take it too far. Taking care of yourself is still as important as ever. Feeling like an alien for the sake of education is not worth it. Remember to keep in touch with your friends and family, talk to them as often as necessary.

 

Practice Constantly

Practicing language is not just about doing your homework. You can make practicing English a normal part of your daily routine by watching TV, listening to music, and reading books in this language. 

Yet, this is a bit tricky. When being surrounded by white noise, people tend to learn not to notice it. You need to ensure this doesn’t happen. As you watch movies or read books, maintain your attention on what you’re doing. If you hear or see a word that you don’t understand – translate it and write it down. Be mindful and remember what you’re doing this for.

 

Writing Is The Answer

If you want to specifically learn to write, you need to do one thing, and that is to write. Continuous practice will help you understand what mistakes you often make and, in time, eliminate them. Focus on your goal, and don’t get discouraged when something’s not working. After all, even Rome wasn’t built in a day!

Get a journal and write in it daily. Pick a new topic every time and note everything you can think of. It’s also important that you write by hand, a spelling checker in your computer is tempting, but it will not help you remember how to spell words correctly. 

Besides, journaling as a habit has multiple health benefits, and it can be therapeutic. It can help you get in touch with yourself and process your emotions better.

 

Learn In a Group

It’s proven that learning in a group is more efficient due to the sense of competition. Find a bunch of like-minded people who want to study with you or join an already existing one, like a speaking club.

The benefit of such activities is that you get all these people from entirely different backgrounds who are all good at various things. This will help you exchange experiences, which is impossible if you’re alone.

Schedule regular meetings, come up with topics to discuss and activities to do. You could watch videos or movies together, or talk about common things. Having assignments like describing an event can also be beneficial for the entire group. This way, while one person speaks, the rest think about how they would say the same things differently. 

This will help you feel more confident in your skills and, consequently, speak and write better.

 

Expose Yourself

The most important thing about learning a language is not to be afraid of making mistakes. It’s inevitable; you just have to take it as a natural part of a learning process. 

A child that is learning how to walk doesn’t give up after falling once, and you shouldn’t either. It’s most likely that your friends understand that you’re just learning a language, and they won’t laugh at you for misusing a word or a few. 

Get over that fear of error and make as many mistakes as it will take. Treat it lightly, and don’t beat yourself up for it. On the other hand, try to attend as many events as you can that will expose you to the foreign language. Not only will it boost your English skills, but also improve your social confidence!

 

Wrapping Up

Learning a language is hard; there’s no arguing about that. However, it’s going to get easier with time. Take every hard thing that life throws at you and turn it into a lesson. 

Watch your favorite movies in English, converse with native speakers, and you’ll see the improvement very soon!

Remember to be patient about it. Don’t give up, and don’t beat yourself up over something that you have so little control of. Good luck!

 

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Remote Work + Education: 3 Tips for Students Who Want to Have It All

Phil Collins

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remote work for students

Probably one of the greatest changes for the last year is the shifting to distant learning and working. There are many advantages to the issue, like, not having to commute every day, staying at a cozy home for a whole day. It makes our lives easier in terms of saving time and energy.

If you’re a student, you don’t have to bust out your textbooks every time you go to university. Instead, you have everything close and on the tips of your fingers.

However, within all the positive moments of distance learning, it is highly challenging for many of us. At college or in the office, we have a schedule, a plan which we simply have to stick to.

There is also a boss or a teacher who gives us tasks, checks and monitors our performance.

Well, now, we are our own bosses and teachers and have to come up with the plan and track our tasks independently.

So, how to stay tuned and efficient if you work and study from home? How to get the most of it and not drown in the ocean of procrastination? In this article, you will find three tips to help you out!

 

Set Up Your Workspace

When many think of a distance learning or work, they imagine themselves wearing pajamas and lying on a couch all day with the laptop. No more dress code, make-up, early mornings, coworkers or group mates, paradise!

This is a common misconception of remote work. If you want to work and study from home, it is crucial to create a space where you would stay focused and productive.

Still, if you have had a hard day and feel like having rest on your comfy couch, but there are assignments to be done, leave your worries to professionals in paperwritingservice, just place an order and enjoy your day.

When we both work and study from home, we stay with all those household essentials and, at the same time, have to focus on tasks. That is why a perfect workspace has to be created. So how to reach this ideal atmosphere at home? Here’re some pro tips.

 

Separate Spaces for Everything

This is a common problem for many that they sleep and study at the same place. Our body is a smart mechanism, which gets used to conditions very quickly.

So, as you sleep in your bed, every time you lie on it, your body gets ready to relax and concentrate is the last thing it is ready for. This principle is applied to any other space in your house.

So, your workspace should be particularly aimed at learning or/and work. Every time you get there, your brain will be ready to do the job.

 

Get Rid of All Distractions

This is a very important step if you want to stay productive at home. Your home may be a dangerous space in terms of concentration. To make it easier, help your brain and get rid of everything that might attract your attention and ultimately prevent good performance.

 

Plan Your Day

Every morning when you wake up, you approximately know what the tasks for a day are. So, what’s the sense in planning a day if you already have it all in your head?

This is one more important concept that helps us have everything done on time. Planning a day saves you time and boosts motivation and disciplines.

 

Here’s how it is done:

  • You write down a list of tasks that have to be done;
  • Prioritize them from less important to more important;
  • Hang this list somewhere, where you can always see it;
  • Mark completed tasks.

When you mark the task as accomplished, you’ll get a sense of satisfaction, which may be compared to some sort of praise. There are many tools to write a to-do list from paper to online apps.

 

Dedicate Time for Yourself

When you work and study from home, there will be a risk of abandoning our personal time in favor of more important matters. This factor leads not only to great results but also a concept called burning out.

When people face it, they feel exhausted, demotivated, and apathetic. To avoid this, it is crucial to have time for things you enjoy. It may be a sport, hobby, listening to music, watching movies, seeing friends. Your brain has to relax and get positive emotions to be more efficient in the long run.

 

Final Words

No matter if you want to work and study from home, these principles can be applied to any activity. To manage it all, just follow these basic rules, and you’ll see how your productivity boosts.

Good luck with all your endeavors!

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Startups

5 Ideas on Starting a Business in College

Phil Collins

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Getting your own business is a very responsible yet liberating undertaking. By starting a business while still in college, you can be sure to have an income when you graduate or to at least get some life-saving skills and experience that will help you land whatever job you like later on.

Although starting a business can be quite intimidating, there are lots of resources online that will help you go through the process easier. In the meantime, here are some valuable ideas that will help you make sure your business turns out to be a success.

Develop a Business Proposal

Before starting a business, you need a working idea, something that you can sell to your potential customer. Having an idea is, unfortunately, not enough for success here. It is important to make sure that there is an audience, a group of people that actually needs the product you want to create, and will be interested in buying it. You can even define a “Buyer Persona,” which is basically a description of your target customer, what they are like, what triggers them, what their interests and needs are.

Business proposals can be different, depending on how big a business you want to start. In case you are thinking about looking for some investors, your business proposal should be a solid description of your business idea, convincing enough for people to understand that they will get their money back and gain some profit when your product goes live. In case you don’t need investors, your business proposal can be more of a business plan outlining the main facets of your business idea and the things you need to do to make it work.

Get Some Help

As a person new to the business world, you might need some helpers and advisors to keep everything under control. When it comes to your studies, there might come the point where you need to choose between your business and your degree. To manage the problem, you can reach out to a professional academic writer from essayservice and ask them to take care of your assignments while you focus on developing your business.

 

 

Additionally, you might need to reach out or hire some business or tax advisors, or at least request a consultation with them. Starting a legal business will require you to be good at paperwork, which means some preparation is in place. With a business advisor by your side, you can be sure not to miss any important steps when developing and marketing your business. If you define your company as a start-up, it is possible that some business advisors will be willing to help you out for free, given that they get interested in your business idea and want to get profit out of it too.

Create a Website

Whatever business you choose, whether you deliver services or products, you need to have a website. Luckily, you can make do with little investments here: you don’t need to hire an IT guy or a Web Designer as there are lots of tools where you can create a great website from scratch. You might just have to pay for your domain if you want it to be unique. One of such sources is Wix; it is a free website builder.

Why do you need a website, you might wonder? Well, the days when people learn about businesses from newspapers and leaflets are long gone. Now everyone will go online, look your business up, and expect to see some clear definition of what it is you do and what value you can bring. In case you want to open a shop, your website will function as an online shop. In case it is a service you are offering, your website will give your potential customer enough information about your service and will hopefully convince them to reach out to you and order the service.

Work on Social Media Channels

Having social media channels is as essential as having a website in 2020. While a website is a place where people can order and buy your products or services, social media is a sort of a platform that will lead them up to your website.

With the help of social media channels like LinkedIn, Instagram, Facebook, and Twitter, you can find the right people, give them a brief description of your business, and get them to visit your website and learn more about what they can get there.

 

 

Social media is what can also help you develop a strong online presence and customer loyalty. Online presence means that your business gets regular online exposure. People see posts and notifications about it daily and thus remember and highlight it. When it comes to customer loyalty, social media can help you engage your potential customers, get their interest, and devotion to the product and the very idea of your product. They basically need to feel “at home” with your business, like it is something very close and personal to them.

Try Again Until You Make It

The reason why many businesses fail lies in the fact that people tend to give up if they fail, simple as that. However, the truth is that failure is part of the process. It is a sort of a learning curve you need to go through before you make your business into what it should actually be like. That’s why you should never expect to succeed on your first try or get disappointed if you fail several times in a row. Maybe it is just the universe testing how serious you are about achieving your goal.

Every company has this “success story,” where they tell everything about their ups and downs, their insights, and takeouts. It is good to read those stories to get some inspiration and do a reality check on what building a business actually looks like. If your determination and motivation are strong enough, your business will definitely succeed, no matter how many tries it takes to get there.

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How to Launch Your Startup in 7 Easy Steps

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Image Credit: Unsplash

We all want to manifest success in our lives. It fuels our desires to attain something. People perceive success differently as we have different desires. Some go after enriching themselves with material things to get financial freedom. Others study further to advance to the next level in their academic career. (more…)

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