Knock knock – opening the funder’s door
There’s more money than ever before for SMEs with growth potential though finding the right investor means knocking on a few doors. Believe me, you don’t want to knock on more than a few.
Great entrepreneurs know that avoiding rejection requires research and discipline. Inexperienced fundraisers may find an investor but risk missing the most appropriate, or worse, accept an offer that could damage the business!
There may be eager investors and lots of money available, but the journey is far from easy. Many fundraisers fall at the first hurdle; even proposals with good potential. But rejections can be easily avoided.
We speak with many entrepreneurs but few properly due diligence potential investors. Do you meet the investment criteria? Anticipate a rapid rebuttal if you don’t. Do they invest in your stage of business? Understand your sector? How deep are their pockets? What’s their track record – they need to know yours!
Of course, a good business model is required; an achievable plan; projections with sound and validated assumptions; credible and committed management; intellectual property or other barriers to protect the business; potential returns that meet investors requirements.
Proper preparation is the key to getting through the door. If you need proof, conversations with investors suggest that only 1% to 2% of applicants receive funding. Conversely, over 60% of companies applying for funding received offers after completing the Lancashire Investment Readiness programme.
Investor selection is a critical part of the fund-raising process. Researching and understanding potential investors may seem inconsequential. Ignore it at your peril.
IoT Horizon, The IoT and Digital Transformation Specialist based in East Lancashire sat down with us to tell us about their experience with Investment Readiness and how it has helped their business succeed.
Thank you for sitting down with us today. We’re looking forward to hearing all about the fantastic progress IoT Horizon have made since joining the Investment Readiness program. Could you start by telling us a bit about the business?
We began back in 2017. Deyrick (our Co-Founder) set up the business to educate, collaborate and take the complexity out of IoT. Using his vast experience in Technology and Security sectors, Deyrick assembled a team of first-class Engineers and Software Developers with one goal in mind, to help businesses conquer Digital Transformation and thrive in the Digital World.
We provide digital solutions for social distancing, asset tracking, preventative maintenance, and develop bespoke solutions. With expertise in Digital Technologies, Software Development, Electronics Engineering, and Professional Services, we support clients from an idea or challenge right through to a rapid prototype.
Where did your journey to Investment start?
So, the journey started two years ago when Deyrick began to talk about going for Investment, but we didn’t know where to start or where to go. We had heard many positive reviews from the Investment Readiness Program, so we gave it ago, and we loved it.
At the time, we were a relatively new business, so it was amazing to meet like-minded entrepreneurs who were on the same journey as us. All in all, it was a great collaborative environment.
How are some of the ways Investment Readiness supported you?
One of the main things that will always stick out to me was that they massively helped us define our business model. They introduced us to something called The Business Model Canvas, which has stuck with us ever since, and we still use it to this day. It taught us things like; helping us find our route to market, how can we make revenue, how our ecosystem looks. It was crucial for us, we were complete beginners, and they helped us define our business and gave us a strong structure.
They also helped us with our Pitch Practice and creating our pitch, and they helped us define our business model, so we knew what we wanted from Investment and how we were going to make money.
We also struggled to define our offering because what we do is very broad. One of our products has come as a result of the Investment Readiness Program, and we now have a consultancy process for taking a company through IoT Digital Transformation. It works by us taking a step back, looking at the business’ enquiring about our service and seeing if IoT is suitable for that business.
How has your business evolved since getting involved in the program?
We were a micro-SME, saying that we wanted to go for Investment, and they helped us see the gaps. For example, we needed to make sure we had the right people on the team. We were a family board, whereas now we have Non-Executives and other crucial members of the team.
Where are you with your investment journey now?
We now want to set up a pitch practice day, and I guess the next point will be going for the actual Investment. We are now on that journey. It has taken us a couple of years to make sure we have a defined business model, but we were very early in our journey when we started with Investment Readiness, but they helped us define it.
There’s this massive misconception that going for Investment is scary, but the team couldn’t make it any less scary. They don’t just put you in front of investors. They teach, train and mentor you through the whole process.
It’s safe to say that we wouldn’t be where we are without the fantastic, knowledgeable, and super friendly team at Investment Readiness. We can’t thank them enough.
Chris’ Top Tips for Investment readiness
Chris is an experienced Corporate finance professional, with a career in Corporate and Commercial Banking. Chris joined Investment Readiness in July 2017 and began helping high growth companies improve their chances of raising third party equity finance.
Have you ever wondered what Chris’ top tips for investment readiness are?
- Don’t be shy, when it comes to your fund-raise!
More funding is needed than most entrepreneurs imagine, and it always takes longer to raise. It’s important to be objective and realistic. Articulate when follow- on funding will be required and how much.
- Be resilient.
Raising equity isn’t easy, there will be setbacks, but if you believe, are passionate, have the right product, with a market, a USP, and are fully prepared and rehearsed you should eventually succeed. It can be hard to find the right funder, at the right time, willing to invest. Be prepared for the setbacks.
- Practice, Practice, Practice
When it comes to pitching, you need to be fully prepared. The pitch-deck needs to deliver all of the relevant content, it’s an investment sales pitch, not a product pitch. You need to be well versed and fully conversant with all aspects. The detailed financial information that underpins the whole opportunity should be second nature.
For more information please email CWynne1@uclan.ac.uk
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