Why raising investment for a startup is as simple as baking a cake

Your startup is hungry! It needs cash for product development, marketing and building the team. You’re probably hungry too. You see the opportunity. You have a vision for growing your business but it won’t even make the (metaphorical) oven – let alone get cooked – if you don’t succeed in raising investment for your startup.

Raising investment for a startup is as simple as baking a cake

Raising investment for a startup is like baking a cake.

Gather the ingredients

First you will want to gather together all the ingredients that are needed for successfully raising investment. What does the business do? What evidence supports this? What have you already achieved in the business? You will also need to tell the story of how your business grows using a compelling financial forecast. Investors like to know what they get in return for their investment so you will need to value your startup too.

Craft the recipe

Ingredients in themselves are not enough. You need to put them together in such a way that potential investors can see the opportunity and are excited about it as you are. You need a recipe.

Bake the cake

No one likes raw egg in their cake! You have to cook a cake for the right length of time. It’s the same with investors, they don’t back ideas or hunches. They need to see that business is “cooked”. Investors call this “traction”. It’s how you demonstrate what the business has already achieved and prove this is more than a hunch.

Conduct taste test on the recipe

Different people like different cakes. Do you prefer chocolate cake or fruit cake?

Different investors like different deals for different reasons but, just as most cakes have four key ingredients (flour, sugar, butter and eggs), so investors look for four main ingredients:

  • Opportunity – what’s the problem your startup solves for customers? How big is the market?
  • Team – who is behind the startup? Can they deliver on the market opportunity?
  • Traction – how far has the business got to becoming a reality?
  • Deal – what is on offer in exchange for investment? Is this fair and realistic?

Once you are happy you have built a compelling narrative around these basic elements, check others agree with you by conducting “taste tests”. Speak to trusted advisors, other founders who have raised investment and – when you feel ready – potential investors. Are they excited by what is on offer? Is your “cake” cooked to perfection? 

Ice the cake

No one likes a “soggy bottom” to their cake – and you can expect investors to look beyond the icing. Investors will do their due diligence. Metaphorically, this means investors will prod and poke your cake as if they were judges at a bake-off. You can expect them to test your product, develop their own view of the market opportunity, interrogate your business model and financial forecast and get to know your startup team – and that’s before you get into the nitty gritty of valuation and term sheet.

Offer investors a slice

Raising investment doesn’t happen overnight. You need to get out there, have lots of “cups of tea” with potential investors and show off your “cake”. You will want to work your network, pitch at investor events and get introductions to investors in order to find the investors who want a slice of what’s on offer.

Will you share your cake?

Once you have a queue of investors lined up to take a slice of your delicious “cake”, you’re in a position to choose who you’d like to share the cake with. Consider what each potential investor brings to the conversation. Who can make the biggest difference in your startup based on their skills, experience or contact book? It’s not just about the cash. Who do you want with you for the journey?

Don’t forget the washing up!

Baking isn’t finished until you’ve washed up and put everything back in the kitchen cupboards. It’s the same with raising investment for a startup. The deal isn’t done until the money is in the bank. There are term sheets to agree and valuations to negotiate.

As easy as pie?

Perhaps, baking a cake isn’t quite as easy as it first seems! So much can go wrong in the mix or the cooking. Raising investment for a startup is similar. It’s a process – and requires a chemical reaction – just like baking. It takes time to perfect. You may need to practise and improve to avoid that “soggy bottom” feeling. You can also have fun – in the making and eating of your “cake”. When you understand the process, and surround yourself with people who can support you on the journey, you can settle into enjoying the all those cups of tea with potential investors and raising investment for your startup.

Is your Startup ready to attract investors?

Take the Startup Investment Scorecard to discover if your Startup is ready to attract investors. Start here

Further reading:

For the full recipe on what investors look for in a “cake”, read 7 Essentials that unlock startup equity investment

Discover what helped PEEQUAL raise investment for their startup

Latest Blog & News

How to Get The Best Introduction to UK Angel Investors banner.

How To Get The Best Introduction To UK Angel Investors

A couple of weeks ago we shared 8 practical and eye-opening tips for finding UK angel investors. These were some of the tactics that
Dorset LEP & Focused For Business Team Up banner

Exciting Funding Boost: Dorset LEP & Focused For Business Team Up

If you’re a startup or small business in Dorset looking to raise investment, help is at hand! Dorset Local Enterprise Partnership (LEP) and Focused
finding investors banner.

8 Practical And Eye-opening Tips For Actually Finding Investors

Last month we tried something new in Funding Masterminds: an Idea Swap workshop, where our founders shared their tactics on how to find investors
Funding Secrets: Why having a lead investor makes fundraising easier.

Funding Secrets: Why Having a Lead Investor Makes Fundraising Easier

Securing a “lead” investor can often set off a domino effect, and be the catalyst you need to secure the remaining funds of your
Your most important investor document is not your pitch deck (it's your Executive Summary) banner

Your Executive Summary Is More Important Than Your Pitch Deck!

Do you obsess about your Pitch Deck? Spending hours tweaking it to ensure it gives investors the information they need? Most founders do. A
Looking for startup investors? Our guide will help

Looking for funding? Here’s your step-by-step guide to finding startup investors

Starting a business is exhilarating, but finding the startup funding to fuel your dreams can be a daunting task. Not only will you have
Funding Accelerator Mentor Elliott Gaspar explains what investors look for in a financial forecast for investors

3 Things That will Make Your Financial Forecast Attractive

Much like brewing a delicious cup of coffee, a compelling financial forecast for investors requires a complex blend of data, strategy, and storytelling. It’s
unit metrics that attract startup investors

3 Unit Metrics You Need To Build A Compelling Growth Story

Did the conversation with potential investors fizzle out at the financial stage? It’s not just the vision, but the focus on detail that secures
financial-forecast-charting-growth-1200-1

Investing your time where it counts – the numbers

How the right financial forecast is crucial to unlocking startup investment If you’re looking to secure startup investment, it’s inevitable that at some point
7-Essentials-that-unlock-startup-equity-investment-600

7 Essentials that unlock Start-up equity investment

Start-up equity investment: Investors look for 7 Essential ingrediants when deciding whether to back a start-up – or not! Be succinct to get attention
Financial savings mechanism. Piggy bank formed by gears and cogs

Traction makes it quicker to raise funding for a startup

So you want to raise funding for a startup? To succeed, you’ll need to speak the language of investors. Investors will ask “how much
How To Value A Small Business To Get Investors Excited banner

How To Value A Small Business To Get Investors Excited

Raising investment can be challenging. The preparation, pitching, and negotiation is a time-consuming process, and can distract founders from their primary goal: Growing their
Deliver A Killer Pitch: How To Win Over Investors banner.

Deliver A Killer Pitch: How To Win Over Investors

Understanding the Importance of Pitching for Start-up Success As an aspiring entrepreneur, the ability to craft a compelling pitch is crucial for the success
Resilience training: 6 Proven Hacks to Boost Resilience When Fundraising banner.

Resilience training: 6 Proven Hacks to Boost Resilience When Fundraising

Jennifer Clamp, founder of Aata, and one of our trusted mentors on our Funding Accelerator programme, recently led a resilience training workshop on how
The Start-up Funding Stages You Need To Know About banner.

The Start-up Funding Stages You Need To Know About

Introduction to Start-up Funding Stages Starting a business is an exciting and challenging journey, and securing the necessary funding is a critical step in
How To Prepare Your Business For Investor Scrutiny banner.

How To Prepare Your Business For Investor Scrutiny

What Is Investor Scrutiny? As an entrepreneur, securing investment for your start-up is a critical milestone in your business journey. However, the process of
A Sure Fire Way To Secure Investment: Inside Our Funding Mastermind Community banner

A Sure Fire Way To Secure Investment: Inside Our Funding Mastermind Community

Keeping you focused on unlocking secure investment In the fast-paced world of startups, securing investment can often make or break a business. That’s why