When is the right time to raise investment for your startup?

This might seem an odd question. You go for investment when you need money, right? Wrong! Not only does it take time to raise investment – so you want to start raising investment at least 6 months before you need the money – but there are stages in every business’ life-cycle when it will be easier to raise external investment. Going for investment just because you need the money could mean you’ll waste time and energy. Worse still, the distraction of raising investment may mean your business suffers – making it harder still to raise investment. So, when is the right time to raise investment for your startup?

Hatty Fawcett, Founder of Focused For Business, interviewed two founders who have successfully raised investment in the last year and asked them whether there is a “right” time to raise investment.

Adam Beveridge, Co-founder of Hollabox, started his startup in 2016 and raised investment the same year and went on to raise a second seed round a year later. Hollabox is a social media that makes it easy to see inside the best venues, restaurants and places in real time so you can decide where to go for a great night out.

Sue Frost, Founder and CEO of Curamicus started her startup in 2015 with founder investment and a startup loan. She went on to raise seed investment in 2017. Curamicus provides wearable assistive technology for elders and vulnerable people that detects and reduces the risks of falls.

Hatty: Let’s start with the big question, is there a “right time” for a startup to raise investment?

Adam: This is a tough question to answer, as each business case is subjective and each investor has their own investment criteria. From my experience, I would say the most sought after criteria investors want is revenue from a proven business model.

“The earlier a start-up can prove it will make money, the more this de-risks the investment for the investor.”

The next “expected” criteria, would be a dedicated, full time founding team and a strong vision. A team breaths confidence, a strong vision helps form a path that people want to join you on. It’s a minimum starting point for any venture, I would say.

Sue: I think from a startup point of view it’s best to raise investment when you have a developed true business concept to the point that you’re able to prepare a detailed business plan. Preparing a business plan takes you through the process of self-examination as to the viability of the business for yourself and also clarifies what you’re offering in return for investment.

Hatty: Do you think a startup can go for investment too soon – or leave it too late?

Adam: A start-up can certainly try and raise too early.

“Raising money is so time consuming, to the point that founders can often neglect the core operations of their startup.”

Because of this, you want to make sure when you’ve finally got in front of the right people, and it will take a lot of intros and knocking on doors to get there, you have the right things to say. Otherwise you’ll get a “no” and realise you’ve wasted months of your precious runway.

To avoid wasting time, build credibility with an industry relevant advisory board, make powerful connections and partnerships, (with brands, accelerators and entrepreneurs) and focus on proving your market and concept as cheaply and efficiently as possible before you go for investment. But be wary of leaving it too late or investors may question your startup’s speed to market and scalability.

“The sweet spot is when you think you gathered enough data and evidence on a small scale, to prove there’s potential and a bigger picture.”

Sue: There are different stages to business investment applicable as a business grows.

“Recognise the right stage or type of investment applicable to your business when planning to approach investors.”

Hatty: Thinking about all the times you have raised investment, have you ever found it easier or more difficult to raise investment and what do you attribute that to?

Sue:
“To secure a first investment is challenging. However, once we secured the first investor it made it easier for subsequent investors to consider us.”

From the subsequent investors viewpoint, we had already been through the due diligence process with the first investor and this provided some level of confidence to subsequent investors.

Adam: It’s a lot easier when you already have capital committed, and brands or credible investors on board. Investors take notice of what you’re doing. It was much easier for us to raise when Just Eat invested in Hollabox – it’s a name everyone knows.

“The earlier you try and raise in your businesses life-cycle, the more you risk showing naivety, inexperience and have less proof of concept.”

We tried to raise 3-4 months into the start of our journey. It was too soon. Twelve months later, we had developed, learnt best practices and understood the investor landscape. Our pitches were better, we had a more mature product and a better understanding of our users. That, and a clear road map, meant we successfully raised.

Hatty: As you prepared to raise investment, what were you excited about and what concerns did you have?

Sue: I was excited about the prospect of being able to realise our business dream and bring our product to market so that we could make a difference in people’s lives.

I was concerned at the length of time the financing took as we had to deal with two organisations (three if you include the grant we took) and individual angels. However, I understood the need for due diligence on both sides of each transaction.

“Bringing in third party investors is a big step for any startup. We had to be sure we had the right fit for us as a team”

I needn’t have worried. We’re very happy with the group of seed investors we are working with now. Collectively and individually they are all very willing to help us with our business goals without becoming too involved in the business which is a good balance.

Adam: I was excited about meeting successful entrepreneurs and people who had a vast knowledge of start-ups and business. People who could open doors and give advice. Getting their time was precious, even if it didn’t lead to investment. I found people are willing to help and offer advice, even if they don’t invest.

I was understandably concerned about getting rejected by investors. We received many “nos”. It’s very common for startups on an investment journey but, naturally, the first few always hurt.

“The key with rejections is to quickly use each as a learning curve. Accept that raising capital takes time and keep working smartly to get in front of the right people.”

There’s a book I’d recommend – “Rejection Proof” by Jia Jiang. It helped me develop my investment armour and mindset.

Hatty: Did you have a “lead investor”? Did that make the process of raising investment any harder or easier?

Sue: We did have a lead investor and it was very helpful in the seed round as this provided additional confidence to other investors.

Adam: At first, no we didn’t. We secured a place on a couple of accelerators, including Just Eat. Through this we found a lead investor, the founder and CEO of Tossed.

“The support and connections received from our lead investor where amazing, but also, mentioning the lead investor to other stakeholders and investors, opened doors and made raising from other investors easier.”

Securing a lead investor meant we had terms sheets in place, a committed valuation and share price and a high percentage of investment target committed. That certainly makes raising investment easier.

Hatty: What practical advice or tips would you offer to anyone preparing their business for investment?

Sue: Have a clear idea of how you’re going to make money and what the projected return on investment will be for the investor.

“As an entrepreneur when you have a business idea it becomes very personal to you. Sometimes it’s easy to forget you’re in business to make money.”

Investors are somewhat comforted to see your passion and vision but you also need to know where you want the business to be in 3 – 5 years’ time.

Adam: I would say introductions are key. Investors get hundreds of investment opportunities a week. The way to make sure your start-up stands out is to be introduced by someone the investor trusts. To make sure this happens, build out your network. Become part of networks, accelerators, communities and attend meet-ups. Use your network to ask for introductions.

Don’t just go straight in for “the ask” either. Warm up your contacts with regular progress updates, offer help where you can and show an interest in their own ventures or activity. Reaching out cold is harder and comes across selfish. Help your community, and, when the time is right, it will help and reward you.

Hatty: Do you have any advice or tips on how to maintain your energy, motivation and commitment when raising investment?

Adam: Believe in what you’re doing. You started your start-up because you saw an opportunity and you’re one of the few people that got up and decided to do something about it. Believe that others will see that opportunity too and want to help you. It is draining emotionally and time wise, and the sucker punch is that it doesn’t always have a happy ending.

Sue: In my experience to raise investment requires a lot of energy and it can be exhausting physically. If you’re into exercise then obviously this will help with the stress.

“Keep in mind that this is a phase to your business that is necessary to achieve your longer term goals but it is a temporary period which when achieved will enable you to succeed.”

I’ve met some great people along the way who have encouraged me when I needed it the most for which I’m most thankful.

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How to create a business valuation that gets your start-up funded

Business valuation...the most common deal breaker

A down to earth, step-by-step approach to creating a business valuation for start-ups and early-stage businesses looking to raise angel investment or crowdfunding.

You will:

  • Learn what a business valuation is and how it changes over time
  • Become familiar with the terminology used to express a business valuation
  • Discover the evidence you will need to justify your business valuation
  • Understand what investors look for when assessing value in a business
  • Undertake a practical exercise to identify the drivers of revenue in your business
  • See a worked example of a financial forecast
  • Receive a valuation calculator

Places are limited to ensure a good interactive experience.  Please book early to avoid disappointment.

Duration: 1 hour 45 mins
Location: online using Zoom video conferencing
Presented by: Hatty Fawcett, Focused For Business

Book your place on the next masterclass

If you can’t see the booking form, book your place via Eventbrite

About Hatty

Hatty Fawcett is the founder of Focused For Business  She raised two rounds of investment for her own business venture and now supports others in raising investment, predominately through business angels and crowdfunding. She runs a series of online masterclasses and Crowdfunding Accelerator, an eight week online programme of workshops and mentoring that makes it quicker and easier to succeed at crowdfunding. Hatty also offers free Funding Clinics to founders and business owners raising investment. Hatty regularly speaks on the topic of raising investment and is an active blogger on the subject.

What people say about working with Hatty

“Hatty is a great teacher! The rich content of the course kept me interested and helped me. This course has given me confidence.” Sue Frost, Co-founder Curamicus

“The webinars from Hatty are great but the best bit is the interaction with the other participants and hearing how they are approaching their journey to investment.” David Toscano, Cin Cin Italian Canteen

“Hatty was a fantastic coach helping us create a short pitch, ensuring the delivery of key investor information in a simple but effective way” Gill Hayward, Co-Founder, YUU World

Hatty’s content was excellent and I learnt far more than I had imagined. We had a good laugh whilst getting some serious work done.” Sharon Maddy-Patel, Maddy Lou Shoes

“Hatty made the daunting process of accelerating my business a simple, outlined and structured process. As a company we have gained direction, professionalism and valuable information through her insights.” Arun Thangavel, Co-Founder, Hollabox

You can read more about Hatty on her LinkedIn profile.

Book your place on the next masterclass

How to combat loneliness as an entrepreneur

What words do you associate with entrepreneurs and founders?

Ambition?
Passion?
Optimism?
Energy?

Lonely?

Perhaps not the latter. And yet…

At the outset, most entrepreneurs act alone. They have an idea, they research it, develop it, make it happen – on their own.

They are self-reliant – they have to be. In the early days there is often no budget to build a team, there may not be a co-founder to share ideas with, or to moot the relative benefits of this strategic option over another. Entrepreneurs have to trust their own judgement.

Even when the business is able to support a team, founders have to keep a distance between themselves and the team some of the time. There are some things you just can’t share with the team – especially if the thing that is worrying you is “how do I pay the next monthly salary run?”

And yet, as the saying goes, “a problem shared is a problem halved”.

So what’s a founder to do?

There are practical things you can do to combat loneliness:

  • Using co-working spaces can be a good way of ensuring you have people around to talk to.
  • Making time for networking also makes sure you are meeting new people with different perspectives, but beware people’s natural inclination to present a positive picture of themselves which may mean you feel you can’t be as open as you’d like to be in certain circumstances.
  • Working with a coach or mentor can provide an environment for discussing more sensitive, and potentially challenging, situations – but it can become expensive.


Or you could join an online Entrepreneur Board – an intimate group of entrepreneurs whose businesses are at a similar stage to yours, people who get to know you over time, building trust, rapport and understanding of each other’s businesses. It makes for a powerful support option. Not only does it combat loneliness but it is designed to facilitate problem solving, offer support in responding to challenges and in exploring strategic options. You become part of a community, surrounded by experience.

You are not alone, afterall.

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Find out more about Entrepreneur Boards

Crowdfunding isn’t just about the money…three founders share why they chose to crowdfund

There is no doubt that crowdfunding is a good way to raise investment. What’s interesting is that the reasons people are choosing to crowdfunding are changing. Of course the investment raised is nice – but it isn’t the only reason for undertaking crowdfunding. Below, three different founders share why they choose to do crowdfunding:

“Crowdfunding proved a brilliant way to market test a new product and boost sales.” 

Kellie Forbes and Gill Hayward, Co-Founders of YUU World, who have successfully raised two rounds of equity investment, decided to do reward-based crowdfunding to test demand for a new product. They noticed that “wearable tech” products did particularly well on reward-based crowdfunding platforms and they decided to include crowdfunding as a key plank in their marketing strategy. It wasn’t the easy ride they’d hoped but had some surprising results…Read more

“Crowdfunding enabled us to turn a shared vision into a tangible financial commitment.”

Robert Woodford, Marketing Director at Deep Time Walk, turned a shared ethos and vision for the world held by the alumni of Schumacher College to raise funds to create not only a mobile app that takes you on a detailed and dramatised walk through the earth’s history, but also funded educational burseries in the process…Read more

“I loved the idea of having 100+ brand advocates who are emotionally and financially invested in our product.”

Peter Ramsey, Founder of Movem, wanted to put down a marker in his industry by not only raising investment but also establishing brand advocates in the process…Read more

All three founders faced challenges along the way – no one ever said crowdfunding would be easy – and they have been generous in sharing their experience and advice so that you can learn from it.

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How to create an executive summary that attracts investors

A practical, results-focused masterclass that gives you everything you need to create an Executive Summary for business angels or crowdfunding investors that really sells your investment opportunity.

Developed with input and feedback from active investors, you will:

  • Learn to use the 7 Essentials of a successful pitch to structure your Exec Summary
  • Do a practical exercises to describe your business in one succinct sentence
  • Receive a ready-to-use Exec Summary template which investors love
  • Develop a series of “proof points” that show investors you have traction
  • Discover the three most important things to include in your Exec Summary
  • Receive a supporting workbook, additional resources and proven tips

In addition to the live and interactive online masterclass, if you submit your draft Executive Summary (using the template provided in the Masterclass) the course leader, Hatty Fawcett, will conduct a review of this and provide detailed feedback and suggestions for improvement, giving you additional confidence that you have an Exec Summary that will attract investors.

 

Places are limited to ensure a good interactive experience.

Duration: 90 minutes
Location: Online, using Zoom video conferencing
Presented by: Hatty Fawcett, Focused For Business

Book your place on the next masterclass

If you can’t see the booking form, book your place via Eventbrite

About Hatty

Hatty Fawcett is the founder of Focused For Business. She raised two rounds of investment for her own business venture and now supports others in raising investment, predominately through business angels and crowdfunding. She runs a series of online masterclasses and Crowdfunding Accelerator, an eight week online programme of workshops and mentoring that makes it quicker and easier to succeed at crowdfunding. Hatty also offers free Funding Clinics to founders and business owners raising investment. Hatty regularly speaks on the topic of raising investment and is an active blogger on the subject.

What people say about working with Hatty

“Hatty is a great teacher! The rich content of the course kept me interested and helped me. This course has given me confidence.” Sue Frost, Co-founder Curamicus

“The webinars from Hatty are great but the best bit is the interaction with the other participants and hearing how they are approaching their journey to investment.” David Toscano, Cin Cin Italian Canteen

“Hatty was a fantastic coach helping us create a short pitch, ensuring the delivery of key investor information in a simple but effective way” Gill Hayward, Co-Founder, YUU World

“Hatty’s content was excellent and I learnt far more than I had imagined. We had a good laugh whilst getting some serious work done.” Sharon Maddy-Patel, Maddy Lou Shoes

“Hatty made the daunting process of accelerating my business a simple, outlined and structured process. As a company we have gained direction, professionalism and valuable information through her insights.” Arun Thangavel, Co-Founder, Hollabox

You can read more recommendations on Hatty’s LinkedIn profile.

Book your place on the next masterclass

If you can’t see the booking form, book your place via Eventbrite

See the full range of Preparing for Investment: Online masterclasses

Crowdfunding Accelerator graduates raise almost £400K of investment

Crowdfunding Accelerator is a year old (as at July 2017) and our graduates have raised almost £400K of investment for their businesses during that time. Proof, if you like that Crowdfunding Accelerator increases your chances of raising investment. Congratulations to all our graduates.

Crowdfunding Accelerator, an eight week online programme, makes it quicker and easier to prepare for crowdfunding, focusing your attention on the things that really matter.

Find out more about Crowdfunding Accelerator

 

New crowdfunding regulation could make it harder to get accepted onto a crowdfunding platform

The Financial Conduct Authority (FCA) which regulates both peer-to-peer lenders and equity crowdfunding platforms has announced that it plans to introduce more regulation to protect potential investors and help them understand the risks of investing via crowdfunding.

Areas likely to come under scrutiny include:

  • more prescriptive requirements on the content and timing of disclosures
  • better management of conflicts of interest
  • improved standards of due diligence and
  • enhanced client assessment rules.

These changes could lead to new eligibility requirements for companies wishing to crowdfund and greater scrutiny of their businesses plans and forecasts, making it harder for businesses to be accepted onto equity crowdfunding platforms. It is also possible that crowdfunding pitches will require greater validation in order that risks can be more accurately assessed and reported.

Read the FCA’s an assessment of new rules for crowdfunding

Want help with your crowdfunding application and campaign? Learn how Crowdfunding Accelerator makes successful crowdfunding quicker and easier