Founders Institute Singapore “Fundraising session”

Masa Homma, General Partner, Incubate Fund

1. Understanding investors ecosystem
• The most important thing for fundraising is investors ecosystem around you. • Each investors have different investment criteria as of valuation, country, and industry sector that they would like to invest.

(Seed Accelerator) (Seed) 300〜500k USD 30k USD

(Series A) 1〜5M USD

(Series B) 5〜20M USD

2. When is realistic to raise funds 1. You have a team.
– Your are 2 to 3 persons team who committed to your business full time basis. You should includes a good engineer and designer.

2. You have a traction.
– Your service or product already have active user base and you are able to demonstrate how sticky they are to your service.

3. You can explain why you start the business now. – You should demonstrate why it is now for you to start it, not in next
year, not in last year.

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3. How should you calculate the amount of money to raise Basic formula I have is “you can dilute 20% of your ownership per financing round”
–If you can agreed the valuation of your company as 5M USD with a potential investor, I suggest your funding amount should be about 1M USD in this finance round.

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3. How should you calculate the amount of money to raise If you are at the seed stage but you need to raise much larger money, some times you can’t keep 20% dilution rule,
–I basically recommend that you should accept larger dilution and raise necessary amounts for the business.
• In most cases, you will not face the chance of dilutions in the future. you have fewer finance rounds in Asia or Japan than in the US. Bigger finance at seed stage itself is barrier of the entry of your business.

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4. What do investor expect from your company My case, I expect a startup at least X10 return in 5 years.
– If I invest in a company with 3M USD valuation, I expect the company growing to 30M USD in 5 years. – If you try to sell the company with 30M USD valuation, the expectation from a buyer is high.

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5. Advices

1. Make research and understand investors ecosystem around you. 2. Prepare documents to explain why you started your business now and from Singapore. 3. Release your service, monitor the user data, and demonstrate that your business is accepted by clients/users.

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