Agile Fundraising: Keeping your fundraising going during tough times

We often hear founders ask “is now a good time to raise capital?”. At a recent event that I attended, an investor’s candid reply to this was, “it is the right time when you say it is”.  

Perhaps founders should be asking, “how can I raise capital in this economic climate?”

The market is in a downturn and we’ve seen founders and investors take a more cautious approach to fundraising. We’ve got a simple solution to raising in a downturn – instead of holding out for a “go-big-or-go-bust” funding round, founders can raise more strategically, more opportunistically, and continuously. How? Agile fundraising.

When our Head of APAC, Hsiang Low, was invited to speak with Bloomberg he said “With the current climate, it is critical that companies prioritise themselves and the fundamentals of their business. Be a lot smarter on how you raise capital – agile fundraising comes into play in this situation.” 

So what is Agile Fundraising? 

Agile Fundraising is a flexible approach to fundraising. That means raising ahead of, between, and after rounds when the time (or investment on the table) is right.

Agile fundraising is made possible with SeedFAST, SeedNOTE and Instant Investment.

• SeedFAST – SeedFAST is a type of advanced subscription agreement and our implementation of a SAFE, for Singapore. It’s a simple and quick agreement for future equity allowing you investors to effectively pre-pay for shares that will be allocated in the next funding round. 
• SeedNOTE – SeedNOTE is a carefully constructed, simple and now incredibly popular form of convertible loan note. SeedNOTE gives investors debt in your company that will be converted into shares (equity) at the next funding round. Investors in the region tend to like these as they offer more protection and usually have an interest rate that the company pays the investor. 
• Instant Investment – Instant Investment is pretty special (at least we think so). With Instant Investment you can take additional investments into existing funding round deal documents, effectively enabling you to do a small funding round and activate continuous investment.  Raise only what you need or just the investment you’re able to get right now, and then top up anytime, within limits agreed in the initial funding round. 

The startup ecosystem now

During the Bloomberg interview Haslinda asked Hsiang, “In terms of the startup scene then where are you seeing that sort of stress right now. Do you foresee more consolidation in what areas and what pockets do you see as opportunities in?”

Hsiang shared his thoughts: “I think it’s across the board to be honest. There are some opportunities in areas like fintech A.I. possibly real estate. But to be honest it’s slowing down across all sectors opportunity wise. I think we’re looking at an early stage. There is a statistic which showed that 60 percent of fund raising in the last quarter was for early stage deals. So what that’s telling us is actually if investors are going to put money in this bear market they’re going to be looking to the longer term and putting into early stage deals. And in terms of ticket size is also almost evolving to become smaller amounts. And that’s one of the values I guess this brings. “

Essentially, startups can raise capital in smaller increments with agile fundraising.

Look on the brightside

While the market is in a downturn and it can be daunting thinking about the future, Southeast Asia-focused venture capital funds have raised US$900 million so far this year, the same amount raised in the entire 2021. 

It’s just a good sign to keep going but founders have to be smart about securing their share of it. Fundraise smarter. Take advantage of agile fundraising to grow your business.

Hsiang highlights in his interview, “We’ve seen that VC fund raising has been successful over the last year. First half of this year to raise as much funds as they’ve raised in 2021 in the first half of this year. So there are some positives. But generally yes markets are challenging. We think that this is a time when companies need to be more focused on themselves and the fundamentals and be a lot smarter about how they raise capital. Yeah which takes us to the concept of agile fundraising”

As finances are tighter and there’s a greater risk of startups failing, investors want more modest valuations for startups.

There will be a shift in investor behaviour, Hsiang stated, where investors will start placing “strategic wagers” on businesses. Companies need to evaluate their financing methodology and choose the best fit solution for the current economic environment if they want to be among the firms in which they invest. They are likely risk-averse. 

With this, it’s time to think about how to win investors’ trust in you and your product. You will gain an edge by focusing on your business and yourself. 

Do this by checking if:

• You have your 5 year business plan on raising funds during these critical times. This will help investors feel that you have taken into consideration all factors
• You have adjusted your revenue projections accordingly
• Adapted your product to the market 

With that, you are one step closer to closing your investors after doing that.

Talk to our Team