The secret to successful scale-up financing: 10 steps to get investors on side
Even with a product that sells, cost-effective marketing and the ability to generate a profit many businesses can still struggle to raise further funds. You need to spend time to get to know investors, to understand their needs, goals and motivations to succeed at funding. Based on our experience of advising both SME business owners and those who invest in them, here are our ten key points to give yourself the best chance of success.
1. It’s never too early to start
Take the time to research and get to know potential investors over informal chats. As well as working out who would be a good fit for your business, you may also get some helpful free advice.
2. Understand the big picture
It’s critical to be aware of wider economic and market events that could make investors more or less likely to invest.
3. Understand the investor organisation
Each venture capital or boutique investment houses will have a different focus and varying objectives. See if you can spot the high level trends that indicate buying and investment cycles through research.
4. Get to know the people
Of all the ten points, this is the most crucial. As we all know, people buy people, so get to know what makes the people within each organisation tick, on both a business and personal level.
5. Think outside the box
Finding an investor isn’t just about the money but also about how else they may be able to help your business grow, such as by leveraging connections.
6. Investing is a two-way street
In some ways, finding the right investor for you is a bit like dating. Make sure you find a partner with whom you can build up a rapport and can work collaboratively with to grow your business.
7. Align your objectives
As you learn more about each investor map your objectives to theirs. Prioritise your list from worst to best fit so that when you are in a position to raise finance you know exactly who to turn to.
8. Build a compelling proposition
A good pitch must be tailored to each investor, pulling out the relevant information which most closely aligns with both their organisation and individual’s objectives.
9. Embrace the process
Even if the answer is ‘no’, try to take something positive away from each pitch. Hone your pitch with your least relevant ‘matches’ before you meet the investors you really want to work with.
10. Never stop networking
Even if you’ve just raised funds stay aware of the wider opportunities that are out there to keep in the forefront of people’s minds.
Remember, finding the right investment partner is very much a marathon, rather than a sprint. So start early and follow the steps above. Not only will you increase your chances of raising finance but you’ll also be much better placed to spot future opportunities for growth along the way.
This article was written by the UK Raise team who have extensive experience of supporting companies through their fundraising.
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