5 Angels, 5 tips: The Pros Offer Advice on Raising Finance
Whether you’re a start-up launching your seed funding round or a seasoned scaleup well-versed in the language of fundraising, it’s always important to listen to those you’ll be hoping will invest in your company. We spoke to five of our business angels about what they think is crucial for growth businesses to remember when raising finance.
1 Sort out your figures
I think the biggest mistake that companies make when looking for investment is not having their financials really figured out, especially the projected targets and where they’re heading. Investors really want to know what they are getting in return for their cash investment and if you’re not fully versed in how they’ll make their money with a clear exit strategy, they won’t be interested.
Alex, investing in growth businesses for five years
2 Make your business plan clear
The advice I would give to people looking for equity investment in their businesses is to have a very clear, simple and well-written business plan. People are busy. Investors are busy. They want to be able to read it easily, quickly and succinctly and understand what that business does. Make sure you have a slick presentation. Don’t be overambitious in the projections that you set yourself, and make sure that you engage with your potential investor community.
Caroline, investing for six years
3 It’s all about the people
You need to be absolutely convinced that you’ve got the right management team. A team that knows that once they’ve got the funding, and there’s going to be a lot of pressure on them to spend the money quickly to get traction and momentum going in the business. The team needs to deploy that money in terms of investing in getting the right people on board and making sure that they’re not going to alter or damage the culture of the business as they proceed.
Debs, investing for 10 years
4 It’s not all about your track record
When start-up or scaleups are fundraising, many spend a lot of time on their credentials, about who is on their board and how many companies they have sold on. However, what we really need to is for them to articulate what the business model is and keep it simple. If you can’t communicate what you’re doing as a business, it doesn’t matter how good your board or track record is.
Divyang, investing for 11 years
5 Keep your valuation realistic
Don’t be too greedy with the pre-money valuation. Most companies I see now, they show you the numbers and you think how on earth did they come up with that figure? You might as well look up at the sky and see a flock of pigs flying past! Thanks to government policies and other things that have happened in recent years, a lot of company valuations – for listed companies – are very high. But even so, I think that many of the private offerings that come before me are at improbable valuations. I would far rather invest in a business that has a realistic – conservative even – current market value.
Peter, investing for 37 years
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