We are all familiar with the daunting statistic that startups risk a high failure rate – 20% of businesses fail in their first year and around 60% will go bust within their first three years. One, if not the top, reason startups fail is due to insufficient financial resources. Having the funds to get started and maintain the business can require a little help from outside sources, such as an investor. While asking for money from a stranger may feel nerve racking, it can be just what you need to kickstart a thriving business. Finding the right investor requires due diligence on the company’s side. It’s not an easy process and can take time, but putting in the effort will be well worth it.
Finding the right investor
The first, and perhaps the most daunting task, when looking for an investor is knowing where to start. Searching the internet can be overwhelming, and so the good news is that a great place to start is actually within your own network. This is an invaluable source when it comes to looking for investment as it can provide face-to-face introductions that are crucial to establishing a relationship with what could be your potential investor.
Before approaching an investor, it is important to do your research – look at investment activity that has been happening within your sector over the last 12 months, this provides you with a good starting point. Some questions to think about when you are doing your research include:
● Can you identify any companies that were at the same point that you are in now? If so, how and where did they find investment?
● Have they said anything about their investors? Remember, first-hand feedback can be insightful.
● What have they achieved since securing funding? Are they being well supported? Are their investors hands-on or off?
Another great way to rub shoulders with potential investors is by attending events, specifically for start-ups or relevant to your industry. Be sure to look at who will be attending the event and be prepared to introduce yourself – you don’t always get the chance to present at these events, so you need to lift your networking game.
Getting accepted onto an accelerator programme could be a real game-changer for your business. Not only do they offer funding opportunities but you will also benefit from expert training courses and the opportunity to network with other successful entrepreneurs who have been through the same process. While they may be fast-paced, you are provided with an enormous amount of experience and guidance in a short amount of time. Being on an accelerator programme will also set you and your business apart from competitors as they are viewed with a certain amount of prestige amongst investment circles.
How to stand out when approaching an investor
When approaching an investor, the first 60 seconds of your pitch are the most important when it comes to grabbing their attention. This is all about your ‘Hollywood Pitch’ – that WOW intro – to truly set you apart. It is crucial that you are able to summarise your company concisely and positively in 60 seconds so that your audience is ‘hooked’. You may feel like you are just one person among many who have a million-dollar idea, but if you can stand out in the investor’s eye just from your opening lines, then you are already better placed than your counterparts.
To head into your pitch with confidence, it’s worth remembering:
● You need to know your own market from the inside-out, along with the growing expectations within that market. Investors will want to know just how far their investment is going to go.
● You must know what differentiates you and be able to articulate this clearly to them.
● Confidence is key – there is no one that knows your business better than you do.
How to get the conversation started
Once you have gained the investor’s interest, it’s important to start having the conversation about what theycan provide for you just as well as what they expect from you. Just as you had to sell yourself or your business and that standout moment, so will the investors. An investor should be able to ‘wow’ you in terms of what they can bring to the table to help you other than money. Generally this will revolve around their experience and network, but it is important to push them on what exactly their capabilities are.
Think about asking them:
● What is your track record in your sector?
● How can you help scale my company further and faster?
Confidence and perseverance are the two things that have kept me going through my own investment journey. Confidence in knowing that my business can make a real difference in the world and perseverance because I knew the right investment could be a real game-changer.
I have learnt that not every investment is going to be the right one. And sometimes the right one manages to escape you. But there is no one who can know just how relevant and important your business is better than yourself. Starting the journey is just the beginning and can open up doors and realms of possibility for your business that perhaps you didn’t even see coming. Never undervalue what you bring to the table and just how much more that can be – with the right people supporting you.
Dr. Tom Mason
Bramble Energy is powering a Net Zero world - today - and is proving to be a real game changer in solving key challenges in the production of hydrogen fuel cells including: lead times, up-front investment, manufacturing cost and scalability.