How to get investment for your business
8 Oct 2020
Most first-time founders don’t have a stash of cash to fund their business, so many opt to raise external funds through investment. But how can you start out with no connections? And what should you look for when you’re looking for an investor?
During our virtual masterclass, we explored the ways different entrepreneurs can raise funds for their business. Our panel of speakers included: Jessica Warch, co-founder of Kimaï; Ross Kelly, Partnerships Manager at Seedrs; Chris Wichert, co-founder of Koio; and William Orde, Investor at Downing Ventures. Here are the tips and tricks we learned:
Know how much money you’ll actually need
Our panel agreed that a common mistake entrepreneurs make is asking for the wrong amount of money. It was something that Chris had experienced first hand: “Initially we thought $300,000 would be enough, but the first few conversations we had with investors were truly a disaster. It made me start to think in a bigger way about the business. You need to really think about your business plan and how much money you’ll actually need.” Jess echoed this, “It’s a full-time job, so it’s important to raise enough and not go out every month to get more funds.”
Know your business inside out
It may sound like an obvious thing to remember, but investors are going to ask a lot of questions, and it’s crucial you know the answers to them all. It’s a key thing VC’s look for, according to Will: “I love when people know their business inside out. It gives you confidence that they’ll actually execute it.” This means being clued up on your business plan, profitability and – in our current climate – how you plan to do it under social distancing.
However, Jess pointed out that entrepreneurs should also embrace unpredictability in their business plans when they approach investors. “We could have never predicted things like Meghan Markle wearing our jewellery or COVID. Sometimes it helps to have a personal discussion with an investor rather than showing projections, which are often bullshit.”
Pitches go both ways
Although investors are ultimately looking to make money from your business, it’s important to remember that investments are a mutually beneficial relationship. Will agreed with this from a VC perspective: “Finding the right match is massively important. Pitching is not a one-way street, you’re trying to find someone you can get value out of that’s more than just money.” Ross expanded on this point: “You hear the term ‘smart money’: you don’t want the cash for cash’s sake. Some investors can bring a network that you might not have had before.”
Don’t be afraid to cold email
Don’t be disheartened if you’re starting off your investment journey with zero contacts. This is the position that nearly everyone starts off in, including Jess. However, she overcame this issue after some clever strategising: “In the beginning, it’s all about Google and cold emails. We knew female investors would understand the product much better, so we started reaching out to tell them about our vision and what we had achieved. Don’t hesitate to chase, even if they say no. If one person likes your idea, they’re quickly going to introduce you to others.
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