Failing to raise £150,000 and my personal lessons to learn
It’s me again with another part of my life. In the summer of 2016, I had just finished my second year of Uni and I really wanted to build my own business. Seeing loads of startups enticed me and I always dreamed about building my own platform. But I didn’t really know much about an investment or starting a tech business. It’s a whole different world. This was my experience in trying to raise my first bit of cash.
The world we live in is dictated by our environment. If you were to take a village boy to a city, he would be in awe of the skyscrapers, the lights, the noise, the smell. Likewise, if we were to go to a village, we would be like how do these people live without the internet. When I tell people I’m going to try and raise a quarter of a million pounds, especially in Cardiff, they’re like WTF. Literally. I was like that as well to be fair, but you realise that the world is bigger than the city you’re in.
I grew up in an area called Butetown in Cardiff. Arguably it’s one of the most deprived areas in Cardiff. There’s a lot of people who aren’t working, drug abuse and lack of ambition to say the least. So my vision of the world is constrained to what I see. School never taught me about investment. My parents didn’t teach me about investments. My friends didn’t know about investment. Yet this world where millions of pounds is being pumped into ideas is happening every single day.
Now for a guy like me — this was CRAZY! I started doing some reading and the basic concept of investment worked like this. There were different rounds, each which brought their own amount:
- Seed Funding (£0 — £250,000)
The initial funding to help a business get off the ground
- Series A (£1,000,000 — £9,000,000)
Second round to help boost the business and scale
- Series B (£25,000,000 — £60,000,000)
The third round of funding to help solidify the business, scale to millions of users and take the business to multiple countries
These are just average numbers and can differentiate between different businesses.
I was so excited. I never knew about this space. I wanted to be a part of it. So I came up with an idea. Well, more of a problem I wanted to solve. As a frequent gym-goer, who followed a strict training regime, I came up with an idea to help other gym-goers create training plans and log them on an app. It would also use artificial intelligence to figure out what the best exercises and routine would be for that user over time. That was the basic idea.
A name. Well, we came up with ‘BeFitt.’ It was positive, related to fitness and easy to remember.
We got a designer to create a logo, I created a website and I created designs for the app.
You’re probably thinking, where’s the app? He’s an app developer so he must have surely created an app? Surely he’s not going to go to investors with just an idea.
Sorry, I’m getting a bit ahead of myself. Let’s take a step back. BeFitt officially started on 24 June 2016. This was 4 months before I actually started learning how to do mobile app development. So I basically did just have an idea. Oh, I also had a business plan. A very lengthy business plan which I and my friends (Dheeraj & Zak) spent 3 months creating. We went through competitions, market research, finances and so much more. Like actually so much more. It was in-depth but as you’ll learn later, it’s not enough.
So we had:
- Business Plan
- Some ambitious lads
But we didn’t know how much it would cost to develop this idea and we needed to show investors what we were going to spend the money on. So we went out and got some quotes.
Just pause for one moment now. How much do you think an app would cost? Like honestly? Let me know before you scroll down and see some of the emails below of how much we got quoted.
When we finally found a quote which matched our budget we were ready to go ahead and try to get our investment. I learned about a welsh government agency known as “Finance Wales” which helped out businesses based in Wales. I got so excited. This was perfect for me! Everything felt like it linked together. So I sent them an email with everything we had.
Here’s that email:
I was anxious at first. Would I get a response? What’re the next steps? Did I ask for too much? Did I ask for too little?
Well, they did get back to me.
Here’s what they said:
On 8th September my dream was gone. One application and one response killed it all. I didn’t apply for finance anywhere else. I was like f*ck this. All that work for them to not even have a conversation. So I was like cool, let me finish University and that’s what I did.
The Lessons To Be Learnt
Looking back now at how I tried to raise investment I can see that I was very naive. Nobody is going to invest in an “idea.”
- Have a product
It’s so easy to have an idea but you have to prove to investors that you have a valuable product or an idea that is so unique and distributive that it’s worth the investment. Which is very hard to do.
- Have sales
Without any proven sales your business is worthless. You have nothing to give and the investor has everything to lose.
- Get user feedback
Without users, you can’t make money. So you need users and their feedback to help build the product and then make it into a viable business.
- Put your money where your mouth is — Invest your own money
If investors are going to be putting it, potentially millions, they want to know that you’ve invested into the business as well. So if you truly believe in it — invest in yourself.
This is just a few things I learned that you need. You, of course, need way more and I can spend hours on marketing, design, customer acquisition, location etc but it’s important to prioritise what investors are looking for when going for investment. But the biggest lesson of all is that you can do it! This world is accessible to anyone.
You need a product that is actually viable that solves a real-life problem but also a problem that people are willing to pay for. I’m a firm believer in “ideas are cheap, execution is key.” Anyone and everyone can come up with an idea but to execute it properly is where the magic is.
I was naive when I went to raise investment. People can say I was young and not count it as a failure but I do. In hindsight, I should have done more research and shouldn’t have been so apprehensive at the possibility of getting “free money.” And as you’ll learn with many more of my future posts I’ve made a lot of failures. But failure is part of the process to success. Without it, we cannot learn. We have to make mistakes and take the step, even if everything is stacked up against us. Even if we think we can’t do it. We need to make that first step. I’ve always been fearful of what people will say. I’ve always found it difficult to continue going forward with all the mistakes I’ve made. However, I always take a step back and see the bigger picture. I can see that these mistakes have so many lessons, so much to learn, and that’s where true growth happens.
So do it.
You make take Ls, hundreds of Ls. But continue. As I am. This was my first attempt at raising money. Will it be my last? Heck no!
Foodly is my next mission and I’m working on all the mistakes I’ve made. If we raise funding, you’ll be the first to know.