From getting to know your numbers to pitching and presenting to a potential investor, there’s a lot to think about and prepare for when it comes to raising investment.
We’ve supported businesses at various stages to prepare raises from £5m to over $100m. We also support with SEIS and EIS schemes as one of our core service offerings, so that’s why we’re sharing our knowledge and top tips on getting investment ready.
First things first
There are different types of investment available and various rounds involved with investment applications, including:
- Pre-Seed (Friends and family)
- Seed (Likely angels or Venture Capital)
- Series A
- Series B
As a business owner, it’s important to consider:
- What it is you’re trying to achieve through investment
- How much investment you need
- How much of your company you’re willing to part with
- Which type of investment is right for you
- What type of investor is right for you
- The terms of the investment agreement
What can you do to prepare?
Know your numbers and create a realistic, scalable forecast
An investor is going to ask about your numbers and forecasts, they’ll expect you to have a thorough understanding of both. It’s likely to put them off if you don’t know your numbers, can’t relay your forecast or explain the rationale behind it.
Take the time to familiarise yourself with your profit and loss, income, outgoings and future predictions. You’re probably familiar with Dragons Den and we’ve all seen how the dragons react when the person who’s pitching, can’t relay the numbers. Remember they’ve seen it all before and will quickly spot any anomalies and mistakes.
Know your business plan and goals inside out
Like the above point. Your investor will expect you to know your business plan and goals inside out. If you don’t know what your plan is or your business goals, you can’t be 100% sure how much you’ll need or what structure for investment you’ll need.
Have a clear burn rate and runway
Your businesses burn rate is how much cash spend your business has over a certain period of time.
To calculate your burn rate, you need to know the total amount of cash you had at the start of the month taken away from the total amount of cash you have at the end of the month. You may also include your cash income into this calculation. Once you’ve worked it out, this is effectively the rate your business will spend its initial investment.
Your business runway is the amount of time you can effectively run your business before you’ll run out of money or go bust. It’s a good idea to pull together and present a burn rate and runway for a solid period, so a potential investor can get a clear predicted overview.
Ensure you’re up to date and compliant
A potential investor is going to check on the status and background of your company, so don’t have any skeletons in your closet! Make sure you have no significant overdue liabilities, any outstanding actions or requirements with Companies House or HMRC and that you’re on top of your regulatory requirements.
Practice your pitch and prepare for a grilling
Don’t go into an investment pitch or to meet a potential investor without practicing first!
Do your research and find out what the investor will want to know, do a practice pitch and practice answering challenging questions. Don’t forget that an investor isn’t just investing in your business, they’re investing in you, so it’s important you make a great, lasting impression.
Who can help you prepare?
We’re here to help you get to know your numbers inside out. We can help you prepare your forecasts, ensure you’re compliant and even practice answering questions with you!
If you need help understanding regulations, if you need to be regulated or the legalities of a potential investment, reach out to a lawyer.
If you’re planning to recruit staff or invest in staff, it can be a good idea to ask for HR assistance and guidance! It’s better to have a selection of advice and to surround yourself with experts, over trying to do it on your own.
Ready for investment?
Get in touch! We’ve helped many businesses prepare for and go through the investment process.