ACCELERATORS Accelerators are programmes, run by organisations or experienced entrepreneurs, to enable a company to grow or scale faster. They typically take equity as a condition to joining the programme. The accelerator’s goal is to“accelerate” the company’s growth to the next round of funding to maximise the chance of a successful return.

This differs to incubators (discussed in Topic 1: Idea) which focuses on supporting a company to explore innovative ideas and build the business and revenue models.

Accelerators can range from 3 months to 12 months and typically provide a structured programme that includes mentoring with various experts, business development advice and opportunities to pitch to at the end of the programme. Some programmes expect the management team to relocate for the programme to better access the mentors, experts and business advice. Accelerators also offer funding capital in exchange for equity when joining the programme. www.nextchapterraise.com 1 Well known accelerators can also be seen as an endorsement for your company and provide useful contacts and branding to grow your business faster. However accelerators differ greatly so its important to review their track record and speak to alumni regarding their experience.

Well known accelerators include: , 500 Startups, Techstars and SOSV. Other accelerators can be found in our funding directory.

IT'S PROCESS

The below image gives a high level investment perspective on how accelerators view the process.

Also, once an accelerator programme has finished, as Accelerators are still shareholders they will expect regular reporting on your business.

www.nextchapterraise.com 2 PROS AND CONS

Structured May need to relocate programme with to join the networking and programme. business advice that may assist your business to grow faster.

May offer working May give up space e.g. in their percentage of equity offices or a co- to join the working space. programme.

Opportunity to test Untested or and endorse your unfocused business model. programmes that don’t deliver may actually slow down Well-known your business programmes may growth. help open door for your business.

Opportunity to meet investors through pitch/demo days. www.nextchapterraise.com 3 ANGELS & ANGEL NETWORKS

There are two types of angel investors – individual angels and angel networks. An angel is an individual who invests their own money in startups for equity and is often a successful entrepreneur themselves. An angel network is a group of people who invest their own money together into companies, in exchange for an equity ownership interest. Angel networks are formed to share research, information, expertise and to pool investment capital. There can be tens to hundreds of members in a network.

Individual angels invest smaller amounts ranging from US$10,000 upwards and target the idea or very early stage of growth. Angel investors differ but many of them are interested in also offering mentoring and advice to assist the startup develop their business model and product-market fit.

Angel networks have a wider investment range which is typically below US$250K but can be higher for some angel networks. As networks can have ten to hundreds of members this a way for angels to dilute their risk by investing as part of a group into multiple businesses. They can also access more deals this way.

Angel-list is a well known directory listing individual angels and networks globally and most cities have a local angel network to research and approach. Gust is also another platform that provides software support to angel networks for management of early stage investments.

www.nextchapterraise.com 4 IT'S PROCESS

Approaching and getting investment from individual angels is an informal exercise. They may attend demo days, be connected to a co-working space, attend startup events or receive introductions or pitches from their network. Each individual angel differs in their investment process depending on their experiences and can range from investing on ‘gut instinct’ to seeking more detailed business information.

Angel networks process is more complex due to it’s group investment model. To source investments, individual member angels may bring investment opportunities to the group or the group receives regular submissions from entrepreneurs. Many networks have a formal and regular scheduled process to submit and pitch to their network. This graph shows the typical deal process suggested by the Angel Capital Association.

www.nextchapterraise.com 5 PROS AND CONS

Individual angel Amount of funding by investors are often angel groups is still interested in smaller than that of contributing time, VCs. expertise and contacts to the company in addition to funding.

An angel network can Angels may not make provide a wide range follow-on of resources and investments. Their support for the startup investments are often from their network. one-time while VCs often put more money in the next round to Angel investors and maintain ownership networks can make percentage. decisions much faster than VCs as they Managing a large invest their own investor base can be an money and may time consuming if require less rigid working with lots of terms than VCs. individual angel investors (i.e. not in a network). Angels often provide mentorship and connections at a valuable time in the business’s growth stage. www.nextchapterraise.com 6 COMPETITIONS

An amazing way to source for funds is through engaging in competitions or contests that require entrepreneurs to showcase or pitch their business against other competitors vying for the same funding for their businesses. Competitions vary from business plan competitions, elevator pitches, to social competitions.

For more extensive business plan competitions, as a contestant you are required to submit and present a comprehensive and detailed business plan if you are looking to win over the judges and potential investor’s confidence. You may also be expected to do a pitch presentation as part of the final competition process.

Pitch Competitions are specific events created for entrepreneurs with new business ideas who are in need of seed money. The entrepreneur and their team present their idea for a new company, usually under 10 minutes, as well as their need for investment and future goals. Pitching competitions offer a unique platform where startups stand to gain early exposure and attention from investors and the tech community.

Well known competitions include Cartier Women’s Initiative Awards, Chivas Venture, FedEx Small Business Grant Competition, DBS-NUS Social Venture Challenge. You can find other competitions listed by country on our website.

IT'S PROCESS

This will be unique for each competition and can vary from a one-off pitch to a series of pitches culminating in a grand final.

www.nextchapterraise.com 7 PROS AND CONS

Boost of confidence: Some competitions winner can promote may be time the ‘win’ to other consuming to join investors and distract from running the business

Branding and A loss can be marketing of ‘win’ disheartening for the during and after founders/team competition.

Financial prize

Potential access to mentors

www.nextchapterraise.com 8 EQUITY

Equity crowdfunding is the process of a company raising sums of money from “the crowd” in exchange for equity in the company. Funds are raised using a public crowdfunding website on which the company raising the money lists and promotes their campaign. Investors can then invest via the crowdfunding website into that company and receive a percentage of shares. The website assists in managing the fundraising process.

Due to financial regulations, many countries only allow companies registered in the same country to list their campaign on an equity crowdfunding website. When researching equity crowdfunding websites, firstly determine if you are eligible based on where your company is registered.

It is important to note that all countries differ in their investor restrictions on who can invest using an equity crowdfunding platform. Typically investors (“the crowd”) on an equity-crowdfunding platform need to be accredited investors meaning they have confirmed they have a specific minimum net worth. One key exception is the USA through their JOBS Act who have opened up equity-crowdfunding to a wider, more public audience.

Popular equity crowdfunding websites include SeedInvest (US), CrowdCube (UK), Birchal (Australia), MicroVentures (in the USA with Indiegogo).

www.nextchapterraise.com 9 IT'S PROCESS

As equity crowdfunding is a relatively new funding tool, firstly you will need to make sure that you are legally eligible for equity crowdfunding in your country. If there is no applicable platform in your country, you can consider looking into established, popular websites such as SeedInvest (US) and CrowdCube (UK) to see what their listing rules are. Companies typically have to pay a commission to the crowdfunding platform, which can range from 5% to 15%of the total funds raised.

Once you have selected an equity crowdfunding platform and registered interest, the funding process generally is as follows

www.nextchapterraise.com 10 PROS AND CONS

The potential All the information investor base is startups disclose as part much wider as of the campaign is success is dependent accessible by anyone who on a successful can use the equity public marketing crowdfunding platform. campaign to raise the funds. Also there is Campaigns are dependent the opportunity to on the crowdfunding tap into existing platform to manage the customers to invest shareholder base or work in the company. with them to understand how shareholders are It may be easier to managed for their specific raise the minimum platform. funds as you can reach out to more Crowdfunded startups investors for smaller might not be able to amounts which may receive helpful support appeal to a wider from professional and range of potential experienced investors as investors. Angel and VC-backed startups do. Equity crowdfunding can be great for Often there is a limit , branding as the which varies country by campaign increases country, to how much a the startups’ startup can raise from visibility and equity crowdfunding in publicity. one year. www.nextchapterraise.com 11 IT'S PROCESS

BACK UP YOUR IDEA Questions about your business idea.

KNOW YOUR MARKET Questions about your market and competitors.

TASK LIST Questions about the work you have completed and potential challenges.

INTERVIEW PROCESS If the programme is interested in your business then you can expect interviews with various members of the programme to decide if your business is a good fit.

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BACK UP YOUR IDEA F & F might want to see you putting in your own money or taking risk to know you are serious about making this happen, so outline any money or “” you have put into the business.

BUSINESS PLAN Treat any potential F&F investors in a professional manner. Approach them with a business plan so they understand and feel confident in your idea and commitment. This also enables you to better manage their expectations on the amount of money required and tentative timing for when you see the business making money. SIGNED AGREEMENT Use a clear but simple agreement outlining the proposed investment and expectations including:

- The type of investment (equity, loan), - Any repayment terms - Timing/milestones - Expected involvement and/or reporting to the investor - Other important discussions or expectations This document is prepared by Next Chapter Raise for discussion and information purposes only. It is not meant to be relied on as professional advice in any manner nor should this document be distributed without our prior permission. Please visit our website at www.nextchapterraise.com for further information and www.nextchapterraise.com 13 our terms and conditions.