The Ultimate Guide for Startup FundRaising

The Ultimate Guide for Startup FundRaising

Raising money can be a daunting task. Many times our limiting beliefs, lack of contact, uncertainty, and just lack of resources and knowledge keep us from raising or understanding how to raise money but to help your business, to grow big and take your business into the next step you will need funding. 

It might be a hassle as building a startup is already hard and the promise of big, easy, and fast money might be demanding, complex, and not as easy as you thought; that is why instaDeel is giving you this guide for the fundraising process starting from the stages and requirements to resources. Moreover, instaDeel also has national and international VCs, Acceleration, Incubators, Tenders, and Grants listed on the platform.

Let’s start from the very beginning what are the stages of Fundraising?

Source: MintyMint

1- Pre-seed

In this stage, you are mainly exploring the possibility of turning your idea into a product/ service, testing the market, and developing your plan for the launching phase 

Bootstrapping is the commonly known name for this stage in which your business needs to depend on available recourses starting from you, your family, and friends as a viable source of funds.

2- Seed

At this point, you already launched your startup with customer traction. The product developed in this stage is the minimum valuable product/ service and the fund will support further development in your product/services.

You can still count on available resources in funding but you can still seek funds from other sources like Angel Investors, Micro VCs, and Crowdfunding.

3- Series A

This marks the first stage of Venture Capitalist investments and at this stage, you prepare your business for Growth with all set regarding product/ service development but these funds are mainly in exchange for capital.

In this stage, you have your key team in place, and working on your business model proving your business abilities to make profits. You can seek the fund here from Accelerators, VCs, and Angels.

4- Series

At this point, your business must have proven that its idea is scalable and has steady users and revenue. This will let your business grow to match the needs and requirements of your customers. Scaling up your business will help your business in acquiring a larger market share and competition as well. In this stage, you can get your funds mainly from VCs.

5- Series C

When reaching this stage you definitely deserve a big congratulations!

Your business is on its path of growth expanding globally, reaching new markets, and developing a new product/service.  The good news is acquiring funds at this point is much easier because your business is on its way to success and you can check VCs and banks for these funds.

6- Series D

There are no limits for the number of rounds your business might go through but let’s say first that to go beyond the C round you might have missed the main goals of it or a new opportunity is emerged before going to the IPO. but be careful getting in this stage might shake the future investors’ trust.

7- Series E

This is a very bad sign indeed. A few business might survive till reaching this stage because it means they can not generate it is own enough capital and struggle to remain active and private.

8- Series F

It is possible to reach this stage and some of the big and noticeable names have reached it like Uber. 

Every round of funding is a new opportunity for your business to thrive so make sure to use it.

9- Mezzanine funding and bridge loans

This stage may close the financial gap between the previous series and the IPO stage. designed for fairly mature businesses which might need them to acquire another competitor. 

10- IPO

An initial public offering (IPO) is the process of offering corporate shares of a private company to the general public (the stock market) for the very first time to raise capital. In this stage, your business has a growth-oriented team, good governance, and stable finance.

To cut it short

All of the previously mentioned stages allow you to scale your business up based on your current stage in your business journey so you need to identify your stage first to find your best fit potential investors. 

Sources of funding:

After getting to know the various funding stages and where our business is on the journey, we need to know where to move next and exactly who or what to approach to claim the desired fund.

Source: Napkin Finance

1– Bootstrapping  also known as self-funding

At the very beginning of your business, you will need to depend on your savings and try to save costs as much as you can but you also might depend on your friends and family who are willing to support you without any complicated financial reports.

2– Crowdfunding

Small investments from a Kickstarter number of people. This is a very recent form of funds where need to convince people with your idea, product/service so people can pre-order it before you even produce it.

There is a risk of getting your idea stolen but still, there is good room for marketing your business.

3- Incubators and accelerators

In your business’s early stages this option is the best fit; supporting your startup business in various sectors such as infrastructure, networking, marketing, and even financially.

Despite the fact, that their names are always mentioned together they do not have the same functions as the incubator start with your business from the very first beginning bringing it up into a solid business the accelerator will help your business scale up.

Check instaDeel’s list of incubators and accelerators in Egypt:

4- Angel investors

If you consider your business the next unicorn those are the best fit for you are individuals or groups of people who provide funds to promising startups in the early stages so prepare yourself with a rocking pitch, solid business plan, and proof of concept and you are ready to catch one but to compensate for the risk they might ask for up to 30% of your business equity.

Check instDeel’s list of Angel investors in Egypt:

5- Venture Capital (VC)

If you have a good plan and a dedicated team you will get the strong mentorship and control your business might need from those professionals who invest mainly in startups with huge potential and scalability to upscale the already available profitability but they are mainly looking to get their investment back within 3- to-5 years maximum so if there is a speed growth potential they definitely will invest.

Check instDeel’s list of VCs in Egypt:

6- Bank loans

This is the most obvious option but to go for it you need to know the interest rate and the collateral you need to give in return.

Be aware that, bank loans require a lot of documentation, track record, and strict standards in addition to a detailed business plan.

7- Tenders and Grants

Another main source of increasing your business capital and accelerating its growth is tenders and grants and while there is a lot of similarities between them but they do have different meanings  Grants are non-profit funding opportunities that provide financial assistance toward the achievement of specific project objectives. Tenders are opportunities that allow your organization to profit from the purchase of goods, works and construction services by a public entity.

Check instDeel’s list of tenders and grants accessible  in Egypt:

So what about the current funding status in Egypt?

Egypt Status in 2021

The Egyptian startup ecosystem is heating up. According to Eng. Amr Mahfouz, ITIDA’s CEO, Egyptian startups have accounted for 26% of deals in the MENA region, amounting to nearly USD194 million in the first half of 2021.
SO if you have a start-up with a solid idea and seeking funds you have pretty much a good chance to get it.

And remember, instaDeel is here to support your business.

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