This KC Startup Landed a $500K Lead Investor during COVID; Here Are 5 TakeawaysDavid Cawthon
COVID-19 has been challenging for startups and may have even deterred some would-be small business owners from beginning their entrepreneurial endeavors. But would you believe it if I said now was as good a time as any to procure funding for your business?
Hear me out … because my team is proof that it’s possible.
I’m Joshua I. Lewis, founder of UpDown Nightlife, and we secured a $500,000 lead investor for our first round during the pandemic—and that was only the beginning. How did we do that during COVID-19 shutdowns with a business that’s tied to the hospitality industry?
While I’ll tell you there is no big secret to success, I can give you five tips about how I was able to raise the funding my company needed during a global pandemic and how your startup also can leverage this advice for success.
1. Know how your business will operate during COVID-19
First things first: You must know how your business can and will function under the current pandemic guidelines. This can be difficult because for a while, those guidelines seemed to change often. Why is this knowledge important? Let’s zoom out.
Investors want to see that you can be adaptable and have the foresight to anticipate change on grander scales. Using this framework will also give you insight into how making your busines fluid can add more value in ways you might not normally consider. For example, it might enable you to connect with a variety of consumers and not just those you view as your target market.
For me, the shutdown changed how we operated. Nightlife is an industry that has been greatly affected by government guidelines, and our weekly events came to a halt. I took this pause as an opportunity to explore exactly how we could better our product while also researching and utilizing resources that I had not used until that point. In fact, several articles released by KCSourceLink and Startland News on how businesses were coping with the pandemic, lead me to my next tip.
More tips below …
2. Make your marketing intentional
Be intentional with marketing when it comes to your pivot. Chances are, after assessing how COVID-19 will impact your business, you will need to make some changes. That’s OK. The idea is to use those changes to your advantage.
This is the time to show investors exactly what these adjustments look like and how they will be beneficial. Announce the changes you make and make those announcements strategic to attract interest and establish a foundation going forward; these announcements can include information about new hires, product developments and changes in services, which also communicate that your company is transparent, and investors value that.
During this time, I also found an investment tool that I used to expand my knowledge and connections. Services on that site helped refine my approach and introduced me to venture capital institutions as well as accelerator programs. When UpDown Nightlife secured the lead investor for the $500,000 round, that news gave my business a lot of traction. Showing that you are overcoming adversity only helps you capitalize on it.
Once you establish some confidence in the direction of your pivot, you will be ready to seek the investors best suited for you and your business.
3. Find investors who believe in you.
Here is where my advice might be a little unconventional: Seek investments and investors who believe in YOU. Not your business. You.
Although this may seem counterintuitive, I can assure you this is an imperative part of the investment process.
COVID-19 has shown many founders that they have to be able to adapt. In the early stages of a startup, things won’t always pan out the way you envisioned. Things will change. Your business model will have to be modified on a regular basis. The only part of the business that will be constant is you. The investors you choose need to be confident in your ability to lead the company through any circumstance.
Notice how I said the investors you choose? You shouldn’t be beholden to any investor who doesn’t fit the needs you have established for your company.
The Missouri Small Business Development Center at UMKC was a great resource for me through this process. The center’s business consultants helped pinpoint the type of investors I was looking for and the contact information I needed to make an introduction.
4. Know how you will use investor funding
Once you have an idea about the type of investor you want, you need to formulate a clear and concise template for how you will use the funding. Investors want to know where their money is going and if the ROI on their investment is worth it.
To answer this, you’ll have to dissect your business in the form of a pitch deck, or a presentation that helps potential investors learn more about your business. Presenting what problem you are solving, how your product is the solution, who your team is, the traction you already have and most importantly – how you will make money will help you make the proper introductions with investors who are interested in your company.
At this time, you will need to lead them through understanding how their money will be beneficial to both parties. Knowing how you will use their money will give you the confidence you need to talk in certainties instead of hypotheticals. In turn, that confidence you have in your company will reverberate through the investor community.
5. Be ready for challenges
Last but certainly not least, understand this will be extremely difficult but that you need to face it head on and own the inevitable challenges. There is nothing better than being confident in chaos; your resilience is your power.
Being an entrepreneur is one of, if not the hardest things a person can do. Entering into the pitch process with that expectation, you will have a better understanding of the tests you will face. If you are brave enough to start a business, especially during a pandemic, then you already have what it takes to see it through. Do not waiver in that confidence because when all else fails, that confidence will be a great foundation.
Updown Nightlife is THE social media for nightlife. Visit updownnightlifeapp.com and subscribe to our newsletter for updates on app developments, nightlife news, hotspot information and more.