Raising investment is rarely easy, especially when you’re looking to raise significant sums in the current climate. You can, however, give yourself the best possible chance of attracting investors and ultimately convincing them that the opportunity you’re offering is right for them.
Preparation is key, and there are steps that you can take to maximise your chances of success.
You may be the best in the business when it comes to pitching, or not, but it doesn’t matter either way if your proposition isn’t investment ready. It’s going to be extremely difficult to convince a would-be investor with charm alone, and if you want to have any hope of them opening their wallets then they’ll need convincing with more than a well-rehearsed speech.
Some of the absolute necessities to prepare before approaching investors are a valuation, a deal structure and an agreed share price. You’ll want to start your negotiations with a financial forecast including revenue, historic accounts for at least 5 years where possible and your profit and loss from the last full trading year.
Your business plan needs to demonstrate that you know the market, its size and potential, as well as the competitors in your field. You need detailed information regarding your product or service, with patents or patent applications where appropriate. It’s also helpful to demonstrate that your management team, regardless of size, can showcase their experience and expertise in the industry, as well as a transparent record of any non-executive directors or board members.
Set a realistic valuation
When it comes to your valuation, it must be fair. If you undervalue, or overvalue, what it is that you have to offer you risk being rejected at an early stage. Following a process to arrive at an appropriate valuation will demonstrate an understanding of where you sit within the market, and the potential for growth.
Be aware of regulation
The Financial Conduct Authority (FCA) regulates equity investing in the UK to protect both investors and companies raising finance. In order for you to widely market your investment opportunity, you’re required to gain approval from a firm or individual who has been authorised by the FCA to avoid any potential trouble further down the line. Getting this approval will confirm that your proposal is fair, clear and not misleading, and breaching regulation is a criminal offence which can result in damages being paid.
Once you have your investment opportunity clear, well prepared and regulated, you need to get it in front of potential investors. Some like to take their businesses through accelerator programs, or by presenting at specially organised pitch showcases and fundraising events. There are even a number of online fundraising platforms designed specifically for equity crowdfunding, which certainly helps in a landscape where in-person events are limited. The right route for you will depend on the details of your investment opportunity and there is no single correct approach.
Raising the finance equity that you need is a unique journey, and specific advice is recommended before acting. If you have any questions surrounding your own funding requirements, don’t hesitate to get in touch.