Startup Guide: Securing Venture Capital for Tech Companies

Startup Guide: Securing Venture Capital for Tech Companies

A flourishing, positive community allows individuality to shine. Equally, an easy access to resources is good for an economy where the startups are thriving. And one of those ecosystems is the UAE, especially for tech startups. And this COVID-power shift to sectors that diversify its economy has of course, seen a notable increase in tech-related startups, AI, renewable energy, and fintech.

There are clear supports for this, such as the Ministry of State for Artificial Intelligence. Although it has a zero-tax policy in the past, the country currently has a 9% business tax and 5% VAT (except for free zones) (source). Such a business-friendly environment has attracted venture capital firms hungry for high returns from innovative tech ventures. So, let’s discuss the need for Venture Capital funding for tech startups in this emerging ecosystem.

Importance of Venture Capital Investments for Tech Startups

Provide Funding:

Funding assists startups that need market research, MVP creation, launching operations, hiring talent, and promoting the startup product/service.

Strategic Mentorship:

The startup venture capital firms also convey market expert advice on how the startup can generate growth, expand business, be profitable, create the right operational and marketing strategies.

Build Network:

In addition to the financial aspect, the VCs (venture capitalists) are closely connected to the industry and the market, so startups get good access to industry people, such as other entrepreneurs, investors, industry experts, etc. It assists them in matching with trusted partners, in raising funds, and in accelerating startups.

Boost Credibility:

Your startup will get validated in the market with a backing of a credible VC firm. This will help you build a positive brand image you can use to gather customers and give you access to funding down the line.

Well, you know why VC funds are important for tech startups, but how do you get a VC deal? Innovative startups are entering the market and competing with each other, resulting in tech trends in UAE booming. But, with proper prep (and our help), you can snag the deal of your dreams.

IIS has an annual investor summit to bridge the gap between the startups and the investors. We have published the following guide which 99% of startups who raise funding follow, no matter if it is growth stage funding for tech startups or VC.

Wondering How to raise VC funding for tech start-ups?

If you are looking to raise venture capital funding for your startup, then you need to consider a few things.

1.       Prepare your pitch.

So before you begin researching venture capitalists you need to be sure you and the startup are ready. Prepared for what? Your startup/media page and the field you are in.

With so much competition, any investor will dig deep into your leadership and your startup before even putting you on their potential list and given you're addressing their market. But, knowing the above factors helps you develop a pitch that catches their attention and also increases your chances of getting funds.

A few other things investors look for in startups include:

● Scalable Business Plan:

It should describe how you will operate and manage financially, what your marketing and growth plans will be, and so on.

● Market Research & Traction:

New investors will only write checks when they see traction and validation in the target market for your innovative idea. So, Readings on your product-market fit to fund yourself more likely

● Value Proposition Appears Realistic:

The value proposition is also the most important thing about your startup. Based on various factors including the market growth rate, conflicts, startup finances, and scope of your startup, you should build up your startup’s value proposition.

● Highlight Your Team:

One of the things that determines your startup success is its team. Therefore, showcasing the expertise and knowledge of your team can earn you the investors’ trust. It helps to have an expert help you in figuring out what a startup value is for your business.

● For Investors, as they need to have an Exit Plan:

That's when you also need to emphasize about how they can exit the investment upon the growth of your startup. It helps them realize what kind of ROI they may achieve.

So, next time you pitch and pitch deck your startup to investors, remember these points above.

2. Research the best VC firms.

If you start going down this rabbit hole, you will see that there are quite a few venture capital firms in UAE. But not every single one is right for your business. In addition to providing funds, venture capital firms for startups support them with guidance and mentorship.

One of their key functions is providing market insights and advice on business operations. Thus, you must select the web design firm that has relevant experience in your niche because otherwise, they will not be able to assist you. And if you pick a VC with irrelevance experience or with a bad brand image you can be one of the 30% of failures startups with a VC behind.

3. Leverage networking.

Networking is a part of the business world. This can assist you in validating your idea and linking up with venture capital companies and investors. A good referral or trusted connections make brownie points with investors and help you get to pitch more. If you’re working in the tech space, try to grow your network by attending events such as the International Investor Summit (IIS) or sector-specific events like TECHSPO Dubai and GITEX.

4. Present a personalized pitch.

As we learned above, you want to build a great pitch and pitch deck to get investors. Yet, leave some room for customization to make them relevant to the investor and grab their interest. Be sure to have that you personalize it in line with any specific factors or values the investors expressed interest in. So, that will keep you on the same page with the investors for a better conversation.

5. Negotiate.

After you have successfully won the investor’s confidence, it’s time for the most stressful job: negotiation. Asking for large cash flow returns in form of debt or ownership. You have to value your startup correctly and decide what percent of equity is worth the capital you will raise. In addition to funds, ask about the help you’ll receive from the VC firms before closing a funding agreement.

Conclusion

Venture Capital Investments Are Crucial for Startup Growth. Startup venture capital companies provide financial assistance, mentorship, validation, and credibility in the market. Government policies and low tax regulations in UAE make it more attractive for tech startups to start a business there, consequently increasing the competition among tech startups to land VC funding.

But it is possible to make that money rain on you by practicing due diligence to develop your pitch, networking to find potential investors, pitching the right VCs and personalizing your pitch according to their profiles. In the early stages, networking is essential for validating your idea and finding reliable investors to support your startup expansion. Registration for the International Investors Summit- a step towards building a trustful network within the land of UAE! Visit our website for more information.

FAQs

Which explains venture capital funding for startups and its advantages.

This method it allows to a raising large-scale capital. Ventures Capital funding are formed as debts funds or equity funds. Nearly all firms request equity stakes for their investment. Well, as it happens, venture capital plays a key role in tech startup development, as it provides startups with both funds and industrial advice to drive startup growth. They keep their idea validated and systems in place to scale. Also helps to create the startup brand in the market.

Avoid these mistakes when raising funds from venture capital for tech startups

There are few things that tech startups should never do when raising funds and selling their idea. The first is research and effort not put into a pitch deck, which as a result gives off a bad brand perception. And, if you want to raise the right amount of funds, don't overestimate or underestimate your start-up valuation. Listen to your customers and your competitors and write a justifiable business plan. Networking helps you never miss important funding events.

Who are the investors in VC funding process for tech startups?

The venture capital funding process involves several stages for tech startups:

Seed Funding: It is used to develop the initial idea and product.

Series B: Initially focused on optimizing the product and building a customer base,

Series B: Assist to scale operations, broaden teams and grow market presence

Series C: To assist in global expansion and major market share growth.

Each stage aligns with the startup’s growth trajectory and is also a response to its changing financial and operational needs.