On day 2 of GCUC Jamie Hodari, CEO and Cofounder of Industrious, talked about how to secure investor funding.

About Industrious

Industrious was launched when Jamie was running a hybrid, half online and half offline university network in East Africa.  He reported having done five fundraising rounds totaling $150 million. Industrious now has locations in 25 locations.

Five Steps to Raising Capital

When trying to find capital, there are five basic steps.  The first step is to determine if you actually have to raise money.  Sitting and thinking deeply about it forces yourself to layout an explanation of why you want to fundraise.  It helps define the need. Second, you want to develop a strong thesis for what the fundraising round is going to be about.  Ask yourself, “why will capital allow you optimize your opportunity?” This is important because people are more replaceable as operators than as a visionaries.  Third, be sure to commit yourself. Very few businesses are valuable separate from their managing team so dedicate yourself to the cause. Fourthly, go big. Go maximalist in the amount of people you are talking to and the amount of time you are giving the round.  Lastly, to listen to the market. Iterate and be thoughtful about what you are actually seeing and hearing from other people.

However, keep in mind that every time you sell a part of your business, you are exposing yourself more to downside.  Particularly if you’re selling preferred shares. So remember that there is no harm in exploring the option of consolidation and joining together with other similar companies to get more resources.

Additional Tips

Jamie noted that it was tough to sell to investors what is essentially a learning process.  Therefore, you have to try and sell your vision for the future and a claim on cash flow. Paint a picture of where you think you are headed for the investors.  That way, they can better understand why providing you with the capital you need would be beneficial to them.

Even though you are selling your vision for the future, do not get too far ahead or you will lose trust with investors because it will seem impractical or out of reach.  Define the product itself, what is your space and why is it different from other spaces already out there. You need to describe your product in a way that evokes emotional response and take note of what emotions are set off.