“Don’t be afraid to get rejected by investors,” is Emirati serial entrepreneur Mahmoud Bartawi’s message to fellow start-ups keen to raise funding to start and grow their business. Bartawi raised $500,000 (Dh1.8 million) for his start-up Mealzap that launched in July 2021.
“At the fundraising stage, ‘no’ is the default answer that most start-ups receive but it doesn’t mean their idea won’t work. The idea might need fine tuning and support from like-minded people having the right skillsets and expertise,” he said.
Bartawi’s recently launched app Mealzap connects a community of healthy eaters with personal trainers who create meal plans out of dishes from restaurants focused on healthy food. Here’s how he went about creating Mealzap.
As a serial entrepreneur, tell us how difficult is fundraising?
“Even before raising funds, it is crucial to have faith in the idea itself. Coming to fundraising, it is not easy because there will be several rejections. But it is not impossible either. Investors understand that it is not always possible for an entrepreneur to have an idea, a team and the money in place to start and grow a business.
“If the entrepreneur’s vision is strong and they can bring together people with a credible track record and core competencies who believe in the idea and are willing to become co-founders, that’s two steps closer to fundraising. So, now if an investor asks the entrepreneur what if the people leave, they will have a legitimate explanation of the team members being co-founders in the business. Even if these co-founders may have failed before, they have learnt too which makes them more experienced.
“Finally, when the investor understands that the entrepreneur is all-in with a vision, time, effort, people as well as some money, they will be more likely to part with their own money. However, I repeat it is always important to remember that rejection is more common when it comes to fundraising, so entrepreneurs should be prepared to face it and continue improving the vision to finally make it work. For instance, the current version of the Mealzap is a small percentage of what I envision it to be one day, and our investors are aware of that.”
How much does it cost to create an app like Mealzap?
“It can cost anywhere between $80,000-$250,000 (Dh293,850-918,250) to create a native app on Android and iOS. That’s only a ‘minimum viable product’ (MVP) to prove the need for such an app in the market.
“So, the first year in the life of an app is generally all about understanding customer and ‘product-market fit’ (explained below). After launching an MVP, the cost to constantly fix glitches based on customer feedback, adding new features and upgrading are also quite expensive. However, in case a developer joins hands with an entrepreneur the cost of developing an app is lower.
Did you receive any additional support?
“Yes, I have received support from the UAE government. We spent Dh6,500 to license Mealzap under the Hamdan Innovation Incubator programme along with two visas. In addition, I also spent Dh13,000 to set up a holding company with Abu Dhabi Global Market (ADGM) to allocate shares to investors.”
What are your ongoing expenses?
“In my business, the biggest ongoing expense is salaries. We pay a monthly salary of $35,000 (Dh 128,550) to five developers and we are looking to increase. Then we have our COO, CFO, CTO and me, plus a part-time accountant and customer service executive.
“Since nowadays it is easy to find developers from low-cost geographies, we are thinking of that option to increase the number of developers at the same cost. In addition to salaries, we spend Dh7,000 to Dh10,000 a month on branding and marketing activities.”
How important is cash flow management for start-ups? How often should one monitor it?
“Understanding and managing cash flow is perhaps the most important thing that can make or break a business. We look at our cash flow on a weekly basis that helps in estimating runway. When raising funding, we looked at 12 to 18 months of runway.
“However, growth requires capital, and the runway gets shorter because we are keen to grow faster. We are looking to expand to Saudi Arabia and Kuwait by the first quarter of 2022. And for this raising money and allocating resources to meet the set KPIs (key performance indicators) for the next five years is my main task as the CEO.”
What message would you give to fellow start-ups?
“Don’t hesitate to share an idea, because that’s the only way to motivate people to come on board, including co-founders, team members and investors. And that’s the only way an idea turns into reality.”
Before launching Mealzap, Mahmoud Bartawi had co-founded healthy food concepts Under500 and Gymfood.