Harsh Mariwala shares 10 mantras for fundraising

Harsh Mariwala

Fundraising is an integral part of growing not only for a business but also for its entrepreneur. The concept of fundraising has changed over the years with several new categories of capital providers with varying degrees of appetite for risk and investment time horizons. We see that terms such as ‘fundraising’, ‘private equity’ and ‘venture capital’ have become buzzwords.

Many entrepreneurs that I interact with say fundraising is one of their top priorities. For an entrepreneur who is ambitious and focused on growth, fundraising can enable scaling through expansion of their product and services portfolios, geographic expansion or new routes to market. Every growth-ready entrepreneur, somewhere during the course of his journey, will have to trod the path of fundraising.

Fortunately, today with newer avenues, entrepreneurs have a plethora of options to raise funds. While investors are definitely more accessible, entrepreneurs often struggle to convey their business models, plans and strategies effectively. What may be a great business proposition, if not presented in the right manner could easily be missed by an investor. Thus, based on my experience, I am sharing some tips that may help while embarking on the fundraising experience:

1. Know your market size: Every entrepreneur must be able to define the market and explain the size of the market that he/she is operating in. How you view the market and what you are solving for can often dramatically change the size of the pie. The oft-quoted examples in the shared economy of Uber and Airbnb are good examples. For that, it is essential to first know what the market requirements are and what challenges are being addressed. It is important that the market segment has a sizeable profit pool today or trends indicate one in the future.
2. Create a strong Right to Win: This has everything to do with the services or the products that you offer. Entrepreneurs need to be able to explain what the purpose of their products/services is. Are you able to give your customers something which will differentiate you from the rest? What elements in your business model give you the ability to deliver superior value to your customers. This could be technological capability, deep consumer insight, cost structure advantage, better access to data or a significant first mover advantage. One or a combination of these or other factors that are essential ingredients for the success of a business may enable the execution of a winning strategy. This should be articulated in the entrepreneur’s Right to Win.
3. Know your customer: This point comes back to the need for the Right to Win. Entrepreneurs need to know who their customer well to determine the best solution to the need gap that they are addressing. The first solution may not always be the best suited and prototyping the offering in terms of product characteristics, price and mechanism of delivery to get feedback and iterate is often called for. To give you an example, at Marico we were keen to enter the healthy food segment hence we ventured into the segment of oats as a healthy breakfast and healthy snacks. Here, we focussed on the health and nutrition of the food giving the taste a second priority. The oats initially didn’t meet great success. The consumers were quick to exhibit that no compromise on taste okay. Moreover, Indians consumers preferred a hot savoury breakfast to a cold sweet one. Based on these insights we launched a range of spice flavoured oats. The product started gaining consumer acceptance and turned into a huge success.
4. Knowing your Go to Market strategy: Many founders often rush into or get carried away by marketing tactics. What is most important is to understand the nature of your products/services and the channels preferred by your customers. Evaluate channels that can help augment sales and the costs involved. The chosen route/s must be capable of scaling and be profitable at scale.
5. Competition: Entrepreneurs need to have a clear picture as to who their competition is. An entrepreneur should be able to answer investor questions related to who s/he is competing against, who else is offering a similar solution to the business problem at hand, and why a potential customer would choose the entrepreneur’s work as opposed to anyone else’s. When an entrepreneur is aware of these details, investors will be a lot more confident in the ability of the entrepreneur.
6. Team: One thing that entrepreneurs don’t realise is that as great as their product/service might be, only the right team can help in the growth of a company. A successful company needs the right mix of conceptual and execution capabilities involving complementary skill sets. A team that is effective needs to work in unity. Investors closely evaluate the team dynamic between partners, colleagues and very often try to gauge how the team as a whole will execute the vision of the founder/s.
7. Attitude: When interacting with entrepreneurs, investors are making silent evaluations of the attitude of the entrepreneur. Investors are looking to work with entrepreneurs with passion, a daring spirit and yet someone who is receptive to opinions and thoughts. These aspects can go a long way in striking the right chord and set the relationship upon a good start. The attitude of an entrepreneur can make or break the fundraising exercise.
8. Presentation: On an average, PE/VC investors receive close to 10 pitch decks a day and may spend only a few minutes on each. Entrepreneurs should focus on a presentation that shares a sharp and clear story and at the same time stands out aesthetically. Let the investor be intrigued by the presentation. Here one should be careful not to reveal too much information yet make the investor curious to know more about the company and the founder.
9. Know your pitch: A pitch that is shared with investors should include details of i) Product and Services ii) Problem or Need and Market iii) Target Customer iv) Competition v) Team vi) Go-to-market Strategy and vii) Numbers.
10. Peer-to-peer learning: As I had mentioned earlier, in the earlier days, there were limited avenues through which to fund business growth. Discussions on fundraising were even fewer. As times and mindsets change, the concept of peer-to-peer learning has also progressed. These platforms make it much easier for entrepreneurs to connect with like-minded entrepreneurs to discuss how they can go about their fundraising requirements. Interacting with entrepreneurs who have traversed similar paths can be of immense help to first-timers. The knowledge flow, exchange of thoughts, ideas, suggestions and even networks can result in valuable support which can boost the confidence of entrepreneurs making the fundraising exercise a lot less daunting than it may seem at first.

The key to successful fundraising is to have a plan. Start with a small goal and keep it simple. The very decision to begin fundraising requires just as much consideration and time as any subsequent step in the process. This process requires time, dedication and patience. To ensure that your initiatives meet success, ensure you have absolute clarity about why are you looking to raise funds. You may not meet the ideal investors immediately but continue to seek suggestions from entrepreneurs who have already raised funds for their companies. If your business goal reflects the Right to Win in an attractive market and you have the right attitude – I can assure you, there will be no stopping you.

(Harsh Mariwala is Chairman, Marico Ltd and Founder, ASCENT Foundation)