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Attracting Investors

Seed Engine Top Advice on How To Attract Funding

Marc Elias, founder and CEO of business accelerator Seed Engine, talks to Entrepreneur about how to secure financial backing for an innovative start-up.

Monique Verduyn




How Seed Engine works

Seed Engine is an innovative business accelerator programme that pairs seasoned entrepreneurs, venture capitalists, mentors and business coaches with start-up tech entrepreneurs whose distinctive and disruptive technology business concepts have passed an application and evaluation selection process in exchange for a 20% equity stake in the business.

The offering includes a 12-week business boot camp and R100 000 capital. A Demo Day gives the entrepreneurs an introduction to potential investors to attract further funding.

Seed Engine holds three programmes a year for up to ten dynamic, investable start-ups. The next one starts in September, and next year’s first programme starts in February.

Related: The Do’s and Don’ts of Meeting with Investors

How important is it to have a unique idea?

To be competitive in today’s market, you must have a novel business idea that sets your business apart from the countless others competing for consumer spend. The best ideas are different and unique in concept, and they meet a need.

That will result in high returns over a long period of time, which is what venture capitalists look for. If your idea has a shelf life, it must have high barriers to entry so that competitors can be kept at bay.

Venture capitalists are interested in innovation and disruptiveness – they want to know how much you’re going to annoy the big guys. They also want to see scaleability and international flavour.

Why is scaleability so critical?

Venture capital companies look for businesses that can achieve a multiplication of enterprise value in a relatively short timeframe. That means your product or service should be generic enough to be applicable to many people.

It should be able to grow quickly in other contexts and perhaps other countries. You need to be sure that if you ramp up the number of users or customers, it will show in the financials.

Scaleability means that the business has the potential to grow its revenue base significantly faster than its cost base.

Related: 5 Ways to Minimise Risks for Investors

What is the ideal composition of the start-up team?

I only look at teams of people, not lone entrepreneurs. The reason for that is that life happens – if the entrepreneur gets run over by a bus, you’re left with a business and no one to run it. I look for a team that comprises a CEO and a CTO – if a technology business does not have a chief technology officer, it will have to outsource all development which is expensive and makes it difficult to innovate.

Because we apply lean start-up methodology, we encourage focusing on continuous innovation through vigorous testing and a build-measure-learn-feedback loop.

Instead of spending a long time on development and only then allowing customers to use the product, the lean start-up approach provides customers with the minimum viable product as early as possible in the development process.

From there you iterate continuously based on ongoing customer feedback. To do that, the business has to be able to pivot swiftly when necessary to move from alpha to beta and to the final product. Only a business with a good team is able to do that.

The next most important function is marketing. When you have a CEO and tecchie working together, there has to be a marketing person who will understand your target market and potential clients.

What does a start-up need to do to attract funding?

First, have a business model that has been validated and tested and is suited to the business. The business model describes how the company makes money – it shows how you are monetising the opportunity you have identified, generating revenue and making a profit.

If you have multiple revenue streams, demonstrate how those can work together optimally.

Second, focus on financials. How well do you understand your cash flow? We don’t expect people to be experts, but they must know their finances and be able to prove that their key assumptions are thoroughly researched.

Passion is the third critical component. There is no way I can walk into an investors’ meeting and sell a venture as well as the owner would do, even though I may know a lot about their business. The founders need to demonstrate their passion and show that even if things do not go according to plan – which they won’t – the founders are married to their business regardless.

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.


Attracting Investors

The Investor Sourcing Guide

How to attract and obtain investors to your established, high-growth business.

Greg Morris




As an established, high-growth company, you may find that you need to source capital, identify a mentor, or work closely with other affiliates to prosper. In this case, partnering with an investment holding company can be a valuable growth tool.

So, what should you do if you want to be acquired by a holding company?

Read this.

1. Research everything

If you’re considering a long-term investment partnership, make sure you conduct substantial prior research. There may be many potential investment partners out there, but each has specific venture and industry directives. Get to grips with these.

Related: Is Venture Capital Right For You?

2. Be candid with yourself

The amount of capital that you need will affect which holding company you choose. In particular, you’ll need to understand what your risk profile looks like relative to the returns you expect to provide. This will also help you to source, entice, and keep the attention of the most appropriate partner.

3. Identify your must-haves

Any investment partner you choose is likely to be able to provide you with funding, a broader network, and economies of scale. Beyond these, however, you’ll need to decide on your most important benefits (must-haves), so you can target the companies that can offer you the best fit.

4. Spell out your funding plan

You’ll need to be very clear on how you plan to spend the funding you get from your investor. This plan should stipulate, in particular, how you plan to grow.

Related: 5 Key Questions To Answer For Raising Funding

5. Scrutinise each investor

Make sure to analyse your potential investors’ investment history, so you can get a clear idea of where your interests are aligned. Look specifically at things like:

  1. Where investors’ get their funding
  2. What their investment track record looks like
  3. What their investment directives are
  4. Their appetite for risk
  5. The returns they usually aim for

The crux of the matter

Research is essential, no matter which holding company you hope to be acquired by. This will help you to find, attract and retain an investor who gives you the funding you need, and lends you the support to be innovative, productive, and profitable.

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Attracting Investors

6 Great Tips For A Successful Shark Tank Pitch

Whilst most of us are unlikely to appear on television shows such as Dragons Den or Shark Tank there is a lot we can take out from watching these programmes.




Whilst most of us are unlikely to appear on television shows such as Dragons Den or Shark Tank there is a lot we can take out from watching these programmes. Entrepreneurs will often need to promote their businesses to prospective customers, lenders, investors, employees and even suppliers.

All stakeholders would like to know with what and whom they are dealing. They will need to assess risk and will try and evaluate the business against others who are competing for those same funds.

1Know Your Product

You should be able to describe your business within 60 seconds, in a confident and positive manner. Let the stakeholder know what particular problem your business solves which makes it viable and attractive.

Your brand and how you intend to develop it is important in determining whether they will invest or lend you money. Share critical information with them such as large customers, patents and trademarks and details of forward orders.

If you are looking for funding or investment, make sure you have the relevant paperwork to back up what you are saying.

Related: 10 Tips From The Dragons Of Dragons’ Den SA

2The Numbers

You must have your numbers at your fingertips.  A true and successful entrepreneur will know his numbers instinctively and be able to recollect and present them convincingly. Stakeholders want to know your turnover (sales) over the last couple of years, your gross profit and net profit.

Investors want to know what they are investing in and whether there is strong potential for their money to grow. Lenders will want to assess their risk — how are you going to repay the money? Moreover, you as the business owner, need to be sure that you will be able to make the required repayments.

You must know what your margin is, as this will largely determine your viability as a business. Margin or gross profit is the difference between the selling price of the goods and their cost and is usually expressed as a percentage.

3Know What You’re Asking For


Be clear as to the size of the investment you want to give away and how that determines the ‘valuation’ of the business. Therefore, if you wish to raise R200 000 for 10% of the business, that means you value the business at R2m — be sure you can back that up or you will get taken apart.

4Have a Business Plan

The best way to fully understand your business is by way of having a detailed business plan, which has been prepared whilst working through every facet of your business, from the original idea to the finished product.

As the business owner, you need to live this business plan and be able to use it as your daily guide to success. Develop it, change it where circumstances require it, but most importantly know it and understand it.

In this way, you will be able to deal with most of their questions, be they about marketing, research, international expansion etc. It is also a good idea to know your competition and what they are up to.

Related: Dragon’s Den Polo Leteka Gives Her Top Tips To Attract Growth Capital

5Sell Yourself

In most interactions, you the entrepreneur, are selling yourself. Whether it is an investor, lender, customer or prospective employee, it is their impression of you and your capabilities which ultimately determine whether they want to work with you.

Be confident, defend your position where required, as you will need to parry some blows but do not behave arrogantly.

6Learn From Your Mistakes

Many entrepreneurs who have presented to the Shark’s Den and not been able to garner investment have turned their business into great successes. You need to be able to learn from the experience, and if rejected, bounce back even stronger.

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Attracting Investors

3 Things You Must Have In Place To Get That Start-up Bank Finance

If you’re planning to secure funding for your start-up, you need to put the right foundations in place.




The South African landscape for raising finance is tough for any business, with stringent lending regulations. Here are three areas to focus on as you set up your start-up to ensure you’ll qualify for a loan or equity funding.

1Securing a Market

Most SMEs I have mentored or advised start with expressing how big the total market size is for their product or service, but, while this is important to understand, the big question is: What percentage of that market will you attract and how?

Look at the ‘how’ first and work your numbers backwards. For example, if you secure a R10 million contract to supply an item that has a market size of R37 billion you are capturing only 0,03% of the market. However, if you’re able to cover your monthly expenses (including your loan repayment) and make a profit, that’s what counts. You should be able to show this contract or letter of intent to procure, which shows how and where you will find this market.

Related: The One Question You Must Be Prepared To Answer When Pitching Investors

2A Strong Team

When you’re starting out you’re likely to be the sum total of your team. If you’re going down the entrepreneurial journey alone, make sure you have identified who will mentor and guide you through the areas you don’t have competencies in and cost this into the business start-up and running costs.

Focus on who in the business is going to:

  1. Sell and market: Do they have the necessary skill, network, product and market knowledge?
  2. Control the money: Are they financially savvy and can they make sure that money is being used for the right things?
  3. Operate: Who has done this before? Can this individual manufacture the product or arrange the supply of goods or services, ensure quality control and sound human resource management?


Formalising your business is costly but necessary. If you don’t have a formal entity, shareholders agreements, loan agreements, financial statements, management accounts, tax compliance and so on, you will come short when looking to raise finance.

Understand these costs upfront and include them into your start-up budget — this will save you a lot of pain in the long run.

Related: 3 Ways For Social Entrepreneurs To Access Fundraising

The truth is that finance is available for women who have the right business ingredients just as much (if not more — in the South African context) as it’s available for men and just as with men. And, resources such as these help to unpack and guide the core fundamentals that are needed to make business bankable/fundable.

Then it’s all about implementation and staying on track to translate all that you’ve done and all that you wish to do in a bankable business plan, and approach the relevant funder for your needs. The right business mentor can certainly help you on that journey.

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