By Hellen Mukasa
Fundraising is a significant moment for most Startups as the injection of funds can lead to the growth and scale of the business. Asking seasoned investment professionals to believe in your product and trust your business plan can be nerve wrecking. This is especially true for female Startup founders who are juggling managing a Startup and at the same time starting or growing their family. We want it all and deservedly so, but that also means that at some point along the journey, you may find yourself in a position where you must pitch for funding while pregnant. In the eyes of an investor, the mere presence of your growing baby bump spells the word RISK.
In the initial stages, founders typically rely on self-funding, friends and family, or crowdfunding and at this stage, the stakes may not be very high because the amounts involved are usually small. As the business grows, its capital requirements grow as well. Each round of funding serves as a steppingstone to the next round or stage of development and that’s when the competition for investment gets very stiff. As a female founder, let alone a pregnant one, you must prepare 10 times better than everyone else and below are some things you may want to do well.
It is important that you are clear about why you are raising funds and know the right amount to be raised. Have a milestone-based plan with clear timelines regarding what the Startup wishes to do in the next 2 to 5 years. A financial forecast is a carefully constructed projection of company development over a given time period, taking into consideration projected sales data, as well as market and economic indicators. Some of the Key documents you are likely to encounter when undertaking a standard equity capital raising a Term Sheet, a Shareholders’ Agreement, a Share Subscription Agreement.
Ensure you have your “house in order” in preparation for the due diligence being conducted on the Startup. You will need to conduct your own due diligence as well because contrary to common belief among Startup Founders in our ecosystem, not all money is good money. You will want to make sure the investor is who they claim to be and that they will be a good fit for the Startup. The investor will look at your Startup’s Structure, Operations, Material agreements; and Investigate the Startup’s dealings to identify potential legal liability, financial insolvency, or any other red flags that may deem the investment too risky. To prepare for due diligence you should keep a ready folder of the corporate records and documents e.g., certificate of incorporation, annual returns, financial documents, e.g., TIN certificate, Tax Clearance Certificate, Intellectual Property, Material agreements, Employment documentation.
It’s a sad reality that very few local investors are interested in supporting Startups as their preferred investment is real estate. As a result, most founders are constantly on flights to Europe, America and such similar destinations looking for funding. As a female founder preparing for this journey, ensure to check with your doctor for fitness to fly if you’re pregnant. This is a mandatory requirement for you to catch your flight that I also only learnt about when I almost missed my flight. I was headed to Rome to meet investors and alas, I was stopped from boarding the plane because I had no clearance to fly from my doctor to fly while pregnant. Luckily, I was able to get support from the airport doctor and I managed to make the flight.
Lastly and most importantly, as you “put your house in order” for the due diligence, remember to wear your confidence. Accept and trust yourself and have a sense of control in your life. Know your strengths and weakness well and have a positive view of yourself. When you walk into that deal room, that’s the first thing the investors will notice before you say a word. Also, the cliche is true; a beautiful black dress will help you feel less big and more confident. That said, funding is so important, but you need to build your business well to prove to somebody that you are worth investing in, so don’t let fundraising take priority over daily work.
Author is the LegalTech Lab Lead at the Innovation Village
