The investment special

SERIES 1 

At COREcruitment, we have the pleasure of speaking with both clients and candidates from the Investment industry, who were previously or are currently working with globally recognised PE/VCT firms investing in the businesses of our future. I have spoken with them to find out everything you need to know about investment for your business! 

Starting a new business is an exciting venture filled with both potential and challenges. One of the most critical factors determining the success of a startup is securing the necessary investment to fund operations, grow the business, and achieve long-term goals. Understanding when and how to seek investment is key to turning a business idea into a thriving enterprise.  

What makes a business investable? 

The definition differs from investor to investor, but always starts with fit. Potential investors will always consider if your business idea/ model fits their investment mandate, is it the right size, stage, scale for the investor, is there chemistry with the founder and management team? At the early stage, many investors will place more emphasis on the product and team (management, advisors, NEDs and the people that you have managed to surround yourselves with) than historic financials. They're buying the vision that the funding can unlock, not just the past results or current traction. 

Most investors want to see some show of how your business will make money, such as evidence of product/market fit, sales traction, customer/user growth etc. They can then see how the funding unlocks elements of the business (growth, margin improvement, profitability, new audience/market etc.) which ultimately drives a higher valuation.

Speaking to Investors themselves, they firmly believe that the people running the business are what make an opportunity investible (or not!). 

What stage of your business should you be looking for investment?

You can look for investment at any stage of a business’ life, but broadly speaking, where you've reached a point where organic growth isn't enough! A founder with a startup is much more likely to find backing from friends and family who believe in the individual, then when traction has been achieved, venture capital is a typical source, whilst private equity prefers more mature opportunities with a longer track record of profitability. 

However, timing can be crucial in the investment process. Approaching investors too early or too late can hinder your chances of securing funds. 

Perhaps there's an inflection point like a new site or a new retail listing that requires funding beyond the cash the business is generating. Bear in mind that you will likely be giving away equity at this point, it's easy to give away and very hard to get back, so make sure that the amount you are raising is as low as it can be whilst still enabling you to make material changes in the business. 

The amount raised should be sufficient to allow you to execute on your plans over the coming 12-18 months, by which point the business should be in a strong position to raise a subsequent round (if needs be) having demonstrated a material uplift in valuation

By popular demand, we have created a short series of Investment information, next up is series 2 involving insights into having an investor on your board, and the types of investment available.