The investment special - series 3

SERIES 3

What stage of your business should you be looking for investment

Broadly, where you've reached a point where organic growth isn't enough.

Timing is 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.

How to know which investor is right for you and your business? 

The investor/investee relationship can be a long and occasionally challenging one - many investors are on the cap table for 7+ years (longer than the average marriage!), so there must be a mutual understanding and respect from the get-go. 

It is as important for founders to be happy with their investors and vice versa. Can the investor add significant value to the business beyond capital, do they have sector expertise, operational experience, commercial relationships that can be leveraged? Is the investor a person/team you'd feel comfortable picking up the phone to and asking for help, or talking through a problem? Can they follow-on in future rounds? There are all hugely important considerations when finding an Investor. 

Top tips for an investment pitch 

A compelling pitch deck should highlight your business idea, market opportunity, revenue model, team, and financial projections. 

• Keep it succinct and to the point
• Make sure you cover off all of the key points - the problem, the solution, the team, the vision, use of funds etc
• Ensure that you're not wasting your valuable pitching time - do your research on the funds you are speaking to and make sure you're 100% certain that your company fits their investment thesis (size, sector, stage etc)
• The 'Questions?' or 'Thank you' slide is commonly a missed opportunity. In a free-ranging Q&A discussion with a potential investor, these slides can sit on screen for some time - capitalise on this by instead getting across the 3-5 key takeaways that you want your audience to remember.

Conclusion 

Securing investment is a pivotal step in growing a new business. It requires careful planning, a strong understanding of your business’s potential, and a strategic approach to finding the right investors. Remember that investment is not just about the money; it’s also about building partnerships that can propel your business forward.

By focusing on preparation, networking, and understanding the needs of investors, new business owners can confidently navigate the path to securing the funding they need to achieve their entrepreneurial journey.