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3 Rules of Fundraising – Learning from Personal Experience

Today we share a Mr Inderjit’s experience in fundraising his book – The Art and Science of Entrepreneurhship, on his experience of Fundraising.

I have varying experience in fund raising exercises. I have raised funds from family members, angel investors, venture capitalists, as well as private and public companies, mostly for equity financing of various companies I started. I also have raised debt financing, both big and small, from finance companies, banks, and other institutions. The companies that received this funding include those at the early stages, growth stages, as well as stages at which the company was considered large. The amounts I have raised range from $0.5 million for seed-stage funding, $3 million for growth-stage financing, $10 to $30 million debt financing, $36 million for equity financing, and all the way up to US$138 million for my UTAC start-up.

Personally, I also have done angel investing of various sums, some big and some small, at the early stage as well at the later stages of company growth. I have provided debt as well as equity at low as well as ridiculous valuations.

These experiences have enabled me to learn a thing or two about fund raising and how everyone behaves in the process. In the case of UTAC, I overdid things by raising too much money at the early stage. It should have been done at stages and at varying valuations so the founders and the early stage investors would not get disadvantaged by huge dilutions. The rate at which UTAC developed showed me I should have really raised only 60 percent of the US$138 million in the first stage, created some value, and then proceeded for the next round of fund raising. As I said, it was my first experience as an entrepreneur. In the case of Infiniti Solutions, my team funded the seed stage ourselves with a very small amount from a venture capitalist. And then we went on to raise another US$36 million when we were ready to execute the company’s growth. We also raised enough, but I must say, given that we had to go through two downturns in succession, we have had to stretch ever dollar we raised. I should have raised money when I did not need it. I could have done it as planned in my business plan, but got distracted with an early IPO plan for the company. Had we stuck to our original plan, life would have been much better.

I also learned it isn’t easy to practice the three rules of thumb I outlined. Had I followed them, success would have come a lot easier. In future, I will continue to be guided by my three rules of thumb for fund raising.

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