Startup Camp #1: How to Raise Venture Capital in Frontier Markets
The village belle generously splashed oil into her iron pans, and the sounds of sizzle which sang out from them were quickly muffled by additions of silky liquid butter, spring onions, wood ear mushrooms, spiced chicken, and fresh peppers. After a short stay the contents were folded into warm crisp baguettes and topped with shaved carrots. I was in Vietnam, as far from Silicon Valley as I possibly could have been, and about to take my first bite of a real Banh Mi Sandwich, when I’m asked by my ‘fixer’ Thao:
“There’s no VC money in Vietnam — and no mentorship for tech startups. How do I raise venture funds?”
Vacation over. So much for enjoying my sandwich.
Lots of entrepreneurs worldwide face Thao’s dilemma, because Angels and VCs should not be passive money — part of the value they are supposed to add is in helping with recruiting, making introductions, boosting sales, or building the product. And it’s hard for investors to contribute meaningfully when they have no knowledge of tech or the geography the startup sells in.
So yes, in tech hubs like Silicon Valley, New York, or Portland it’s easier to recruit technical talent and find financing. But Startups can and do incubate from just about anywhere now. So if you’re outside a major tech market and having trouble raising venture capital, here are a few ideas on what to do.
- Find out what VCs or Angels grew up or went to university near you. They will both understand your market and have an easier time seeing the potential in your startup. Some might even be planning trips close by in the future for visiting family/weddings. In Thao’s case I told her to reach out to overseas Vietnamese entrepreneurs, as expatriates frequently travel and may actually be looking to make connections locally.
- Pitch the far off VCs anyways. Promise them you’ll commit to flying out to see them every other month. Sell them on the benefits of your local area: an untapped market, lower overhead, less competition. Find out if any of them are coming near you — or promise to host them if they are wiling to make a trip.
- Leverage local resources: California doesn’t see a need to dole out public incentives for tech entrepreneurs, because we have so many here already. But most states and countries have municipal development corporations whose primary purpose is to help founders grow their businesses. Lean on them for capital and resources.