Securing venture capital for your business

When Nicolas De Bonis was looking for funds to grow his start-up he didn’t go to the bank. Instead, he sought out venture capitalists to help him take the next step. 

“We wanted more than just the loan. We wanted the network and expertise that investors bring,” says De Bonis, who founded Workyard, a site which connects builders with skilled tradesmen.

“When you work with venture capital you meet with them every month and they become part of your board and add value into the process. They act as a sounding board for your decisions. They make introductions to other start-ups and other companies.”

It would have also been difficult to secure a bank loan for a business like Workyard, says De Bonis.

Venture capital funding is different from a loan, in that investors put money into a business in exchange for a share in the business. It is often used to fund businesses such as internet start-ups which banks typically consider too risky to lend to.

De Bonis, who founded the business with his sister Alexandra, initially funded the business himself, not drawing a paycheck for the first year until they needed funds to expand. In 2016, Workyard raised US$1 million in venture capital funding from Sydney-based investor Blackbird Ventures.

Lack of funds holding back small business

A report by the Australian Small Business and Family Enterprise Ombudsman last year found access to finance remains a significant barrier to small business investment despite a healthy pipeline of businesses suitable for investment.

The report, Barriers to Investment, A study into factors impacting small to medium enterprise investment, found there is a lack of finance alternatives to traditional loans, which are generally secured against the business owner’s home.

This gap in credit availability is increasingly being filled by fintech disruptors, which use technology and innovative business models to originate, assess credit risk and fund loans - with easy application processes and quicker turnaround times, the report says. Examples include Prospa and Kikka.

De Bonis got the idea for Workyard when he renovated his home, and saw the difficulty the builder had finding subcontractors such as electricians and plumbers, which impacted timelines on the project. 

“We started thinking about how people in the construction industry connect with each other and network with each other and find each other for work,” he says.

The solution was an online platform that connects builders with contractors and lets contractors bid for projects.

“We built this network that helps builders post up their projects, find people who are interested and available, look at their past work, look at reviews from other builders, and connect with them and hire them for jobs.”

IMG 0100

Bigger ambitions win more funds

The site builds trust in contractors by carrying reviews of their work by other builders.

It has 30,000 contractors across Sydney and LA on the platform and it recently expanded to Los Angeles, where the business is growing very rapidly. He also plans to expand the business into other Australian and US cities.

“It’s just such a big opportunity,” he says of the expansion to the US. “When we started the company, we thought Australia was a great place to build the first version because of the construction boom. But we always had global visions for this because we can see there’s a lot of markets across the world that need this product.”

Following the initial funding round, Workyard raised another US$2.8 million from Blackbird and San Francisco VC firm MHS Capital last December. 

The founders had previously joined start-up accelerator Startmate where they spent three months developing their business strategy and learning how to raise funds.

De Bonis says he learned that, counter intuitively, the bigger the founders’ ambition the easier it is to win funding.

He also advises founders seeking venture capital funding to pitch to as many investors as possible. 

Aside from improving the chances of securing funding, it can also provide a new perspective on the business because of the questions potential investors ask.

“The process of pitching a business is not just good for getting money. It’s also good for learning to think differently about your business and getting different perspectives on things you should be thinking about that you’re not or things that need to be improved that you’re not focusing on,” he says.

And while De Bonis acknowledges that giving up a share of your business in exchange for funding is difficult, he recognises the investors are also taking a risk with their money. 

“I actually think it’s a fair system and I’ve been happy with this process. I’d definitely do it again,” he says.

When Nicolas De Bonis was looking for funds to grow his start-up he didn’t go to the bank.

Instead, he sought out venture capitalists to help him take the next step.

“We wanted more than just the loan. We wanted the network and expertise that investors bring,” says De Bonis, who founded Workyard, a site which connects builders with skilled tradesmen.

“When you work with venture capital you meet with them every month and they become part of your board and add value into the process. They act as a sounding board for your decisions. They make introductions to other start-ups and other companies.”

It would have also been difficult to secure a bank loan for a business like Workyard, says De Bonis.

Venture capital funding is different from a loan, in that investors put money into a business in exchange for a share in the business. It is often used to fund businesses such as internet start-ups which banks typically consider too risky to lend to.

De Bonis, who founded the business with his sister Alexandra, initially funded the business himself, not drawing a paycheck for the first year until they needed funds to expand. In 2016, Workyard raised US$1 million in venture capital funding from Sydney-based investor Blackbird Ventures.

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Lack of funds holding back small business

A report by the Australian Small Business and Family Enterprise Ombudsman last year found access to finance remains a significant barrier to small business investment despite a healthy pipeline of businesses suitable for investment.

The report, Barriers to Investment, A study into factors impacting small to medium enterprise investment, found there is a lack of finance alternatives to traditional loans, which are generally secured against the business owner’s home.

This gap in credit availability is increasingly being filled by fintech disruptors, which use technology and innovative business models to originate, assess credit risk and fund loans - with easy application processes and quicker turnaround times, the report says. Examples include Prospa and Kikka.

De Bonis got the idea for Workyard when he renovated his home, and saw the difficulty the builder had finding subcontractors such as electricians and plumbers, which impacted timelines on the project.

“We started thinking about how people in the construction industry connect with each other and network with each other and find each other for work,” he says.

The solution was an online platform that connects builders with contractors and lets contractors bid for projects.

“We built this network that helps builders post up their projects, find people who are interested and available, look at their past work, look at reviews from other builders, and connect with them and hire them for jobs.”

Bigger ambitions win more funds

The site builds trust in contractors by carrying reviews of their work by other builders.

It has 30,000 Sydney-based contractors on the platform and it recently expanded to Los Angeles, where the business is growing very rapidly. He also plans to expand the business into other Australian and US cities.

“It’s just such a big opportunity,” he says of the expansion to the US. “When we started the company, we thought Australia was a great place to build the first version because of the construction boom. But we always had global visions for this because we can see there’s a lot of markets across the world that need this product.”

Following the initial funding round, Workyard raised another US$2.8 million from Blackbird and San Francisco VC firm MHS Capital last December.

The founders had previously joined start-up accelerator Startmate where they spent three months developing their business strategy and learning how to raise funds.

De Bonis says he learned that, counterintuitively, the bigger the founders’ ambition the easier it is to win funding.

He also advises founders seeking venture capital funding to pitch to as many investors as possible.

Aside from improving the chances of securing funding, it can also provide a new perspective on the business because of the questions potential investors ask.

“The process of pitching a business is not just good for getting money. It’s also good for learning to think differently about your business and getting different perspectives on things you should be thinking about that you’re not or things that need to be improved that you’re not focusing on,” he says.

And while De Bonis acknowledges that giving up a share of your business in exchange for funding is difficult, he recognises the investors are also taking a risk with their money.

“I actually think it’s a fair system and I’ve been happy with this process. I’d definitely do it again,” he says.

Officeworks

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