How to find investors for your startup or small business – three founders share what works

You’ve got a great start-up, the businesses is getting traction or – better still – its showing strong growth but you need to find investors to make the most of the opportunity. You’ve written the business plan, you’ve perfected the financial forecast and you are ready to pitch but who are you going to pitch too? Where are you going to find investors and “business angels” to back your investment opportunity? It’s a question almost every founder and entrepreneur will have asked themselves at some stage.

I interviewed three founders who have either recently raised investment or who are currently raising investment for their advice and tips. Jason Kirk of Kirk and Kirk, Dominic Wong of BoRo Experiences  and Shon Alam of Bidweg were generous in sharing their thoughts.

Finding investors is a numbers game
When I was raising investment for my own start-up (Seek & Adore), I remember the best piece of advice I was given was “you have to kiss a lot of frogs before you find your prince (or princess)”. This phrase stuck in my mind as I fixed meetings, grabbed a quick cup of coffee or attended pitch meetings with investors.  It certainly helps if you enjoy meeting people and it can sometimes help to think of it as a game – “how many new potential investors did I meet this week?”.

Start with people who know you
All three founders agree that the best place to find investors is to start with people you know.

Shon Alam of BidWeg whose crowdfunding campaign for the community-based currency exchange will launch imminently is clear that it is worth talking to almost everyone you know

“The personal route is very much the first route. People that you know will often give you time and even if they do not invest, you are using the time to get your message in the correct order so others can understand it.”

Jason Kirk of Kirk and Kirk who raised £150,000 for his eyewear design company was a bit more selective in his approach

“We approached people who knew our history and background and had previously expressed an interest in our company.”

Whilst for Dominic Wong of BoRo Experiences who raised £100,000 for his eco-tourism business, an informal meeting with a former colleague he knew well bore unexpected results

“Finding an investor was pure luck. I arranged a meeting with a contact who I have an existing, long-term relationship with. I went into the meeting hoping he would be my mentor, and he believed in the business idea so much he offered the money to me. I was overwhelmed and flabbergasted with the way the meeting turned out!”

Relationships matter
Whilst you will talk to many people whilst raising investment, for those conversations to result in investment they need to be anything but superficial. You wouldn’t ask someone to marry you on the first date. Generally, you want to get to know someone, find out what you have in common – and what you don’t – and reach a point where you trust and respect each other before making any lasting commitment. So it is with investors.

Dominic expanded on where the “luck” of finding his investor, seemingly by chance, came from

“I truly believe in long-term relationships. In fact my mentor once told me that the Hindu way of doing things is people first, business second. In other words develop deep relationships and business will sprout from it. It is about being constantly genuine over a long period to gain trust, which in turn makes people know you deeper than what’s on the outside.”

Be open to feedback – and benefit from others experience and knowledge
True relationships are two-sided. You have to give and receive – another useful premise to have in mind as you start finding investors.

Dominic used this as one of his goals when speaking to investors and sought feedback on his business when talking to investors

“Bounce ideas and thoughts off other people. It is really isolating and lonely when you are working on your [business] idea on your own. I found it really useful to take sounding from other ‘can-do’ people to get different perspectives. This helped shape my ideas and crafted the words I used to explain my business”

Shon recognises this too

“People you know will often give you time and, even if they do not invest, you are using the time to get your message in the correct order so others can understand it.”

Jason felt that the best advice came from those he had been talking to for a while, those with whom he had built a strong relationship

“Those with whom we had a relationship of trust gave us honest, open feedback from a potential investment point of view.”

It was a result of asking for feedback that Jason found his investor

“Our investor came quite by chance. I had asked somebody well-placed in finance to read our investment proposal to advise us and he ended up asking to be involved.”

Contact potential investors in a way that is consistent with wanting to build a long term relationship
We’ve all been on the receiving end of “spam” – communications from people who know nothing about us, offering something that we’re not even sure we want to know about. How well do you react to such approaches? Investors feel the same.

Shon was rigorous in trying lots of different routes to find investors and he knows which he would use again

“If I was to do it again, I would be talking to more potential investors, rather than just connecting with them via LinkedIn.”

Jason agrees

“Personal contact by mail or phone is far more effective than blanket, impersonal approaches.”

I’ve written before about the importance of making a good first impression when finding investors, Jason went on to talk about this too. He stressed the importance of standing out – but also of keeping it brief

“We created attractive literature that reflected our brand and our intentions. This helped identify our company and its unique aspects in a sea of companies seeking finance. It is rare that a potential investor will have more than a cursory look at the headlines of your opportunity. Make it simple. If they are interested they will delve deeper.”

Closing a deal requires mutual trust and a fair exchange…
The aim of all your conversations with investors is to create a shared strategic vision, trust and mutual respect. Ideally this should be founded on a sense of equal worth, reciprocal value being offered by the founder and the investor – and yet so often people talk about an imbalance of power between investors and founders. The founders I interviewed certainly felt this.

Jason is very clear on this point

“Finding the right partners and striking the right balance in the relationship from the first meeting is imperative. You are bringing an opportunity and investors are bringing money/strategy so the relationship needs to be balanced or it will not work. Investors try to assume a position of strength from day one to strengthen their negotiation position.”

Shon too is clear that the objectives of both founder and investor need to align

“I set out wanting to put together a team that could give me clear advise as and when I needed it, without holding my hand. Therefore, the people I wanted to work with also had to understand the philosophy behind Bidweg project. That having been said, I also wanted them to have a vested interest – but it was not money at any cost!”

Dominic recognises that reaching a deal with investors is not just about the money

“It wasn’t just the money which would help me, but experience and knowledge in the field. Essentially, I was also identifying strategic and tactical options which would propel the business after the initial capital.”

…and a clear route to exciting financial return
Investors are not altruistic. They expect a commercial return in exchange for their investment. The founders I interviewed felt this was expressed in a range of ways

Jason was clear it boiled down to

““How much money am I going to make from this?” in various forms.”

Shon felt investors were focused on intellectual property (IP) as the basis of value

“Investors wanted to know what IP does it have – but not all opportunities can be protected through IP. It doesn’t mean it’s not a sound business”

Jason felt the best way to close the deal with an investor is to

“Ask the right questions [of investors] and LISTEN to the answers. People invest for all sorts of varied reasons and you need to understand the motivation of the person you are sitting opposite if you are to make your opportunity appeal to them.”

Tips for maintaining your motivation
Raising investment is time-consuming and it can – at times – be soul-destroying. All three founders recognised the need to manage your motivation and energy levels so that you stay positive throughout the process.

Dominic stressed the need to look for positives in every meeting – even if it doesn’t result in an investment

“Hear the positivity in their voice or see their smile when they ‘get it’.”

Jason emphasised the need for focus

“Try to pick and choose where you direct your energies. Make it genuine prospects or people from whom you can learn. Seeking independent help to find finance can be very useful, especially if you are a small business with limited resources.”

And Shon urged resilience

“When you get rejected – and remember investors will find hundreds of reasons to reject – do not take it personally. Move on – if your business is investable someone will invest.”


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Book a place on the online masterclass “How to find and win investors”

A focused, methodical approach to finding, warming up and closing deals with business angels and crowdfunding investors.
Find out more and book a place

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Crowdfunding Success: “Momentum is the key to crowdfunding success” says Peter Ramsey, founder of Movem

Movem, the online community marketplace for landlords, agencies and tenants to list and review rental properties, raised £200,000 on crowdfunding site Crowdcube in just ten days (in August 2016). The investment allows Movem to expand into the residential lettings market, growing the business significantly.

Picture of Hatty Fawcett

Peter Ramsey, Founder of Movem

 

 

 

 

 

 

Hatty Fawcett, experienced crowdfunder and Founder of Focused For Business and Crowdfunding Accelerator, asked Peter to reflect on the process of crowdfunding and share his learnings.

“I loved the idea of having emotionally and financially invested brand advocates.”

Hatty: What appealed to you about crowdfunding?

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

Hatty: Did you consider any other forms of investment?

Peter: We considered raising funds privately, including business angel investment. However, I felt Movem needed to make a mark on the industry – which is exactly what crowdfunding helped us to do.

“Crowdfunding isn’t easy – you’ve got to create momentum but that requires hard work.”

Hatty: How easy did you find the process of preparing for crowdfunding?

Peter: Developing a crowdfunding campaign took a lot of time. It probably took me 2 months from making the decision to do crowdfunding to going live. The hardest thing for me was the video pitch. I knew it had to be good, but I didn’t know anybody that could help me make one. So I did it myself. I rented camera gear, got a tripod and filmed/edited the whole thing on my own.

I wasn’t actually that happy with the final cut, but I couldn’t get any more footage, so I had to put up with what I had. On the positive side, that did stop me re-filming again and again. The guys at Crowdcube were very supportive too.

Hatty: If someone is considering crowdfunding, what advice would you offer them?

Peter: My biggest piece of advice is you need to recognise that crowdfunding isn’t easy. There’s a lot of work and effort that goes on behind the scenes. For example, I’d raised some of our investment target prior to putting our crowdfunding campaign live. That was hard work and took time, but it was really important in creating momentum for our crowdfunding campaign when it did go live. That’s the key really, demonstrating momentum.

“I’d wake up at 7am every day and spend the whole day contacting as many people as I could. Literally until I went to bed!”

Peter: Even once you’ve gone live you have to keep that momentum going. You have to keep talking to everyone you think might be an investor. I’d wake up at 7am every day and spend the whole day contacting as many people as I could. Literally until I went to bed! I used everything available to me. LinkedIn, email contacts, the press, friends of friends, Facebook adverts…you name it. I tried it. Crowdfunding is a numbers game – and that requires persistence and hard work.

Hatty: What percentage of your crowdfunding target had you raised before you put your crowdfunding campaign live?

Peter: I had raised £85,000 so just over 40% of our target.

Hatty: Is there anything you would do differently, knowing what you know about crowdfunding now?

Peter: I’d probably be a bit more ambitious. I spoke to so many people during the course of our crowdfunding campaign, there was a ground swell of support and momentum. So many people got in touch afterwards that we could have easily funded £500k.

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Crowdfunding Accelerator is an eight week online programme that makes it quicker and easier to be successful at crowdfunding. Find out more

Crowdfunding Accelerator: Making successful crowdfunding quicker and easier

Crowdfunding Accelerator: An online programme of workshops and mentoring


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How to succeed at crowdfunding: Free webinar
This free 60 minute, live and interactive webinar reveals everything you need to know to succeed at crowdfunding from how to choose the right platform, what to put in your crowdfunding pitch and the thing that no one tells you but which really makes the difference between success and failure.
Find out more and book a place
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The harsh truth is that 50% of crowdfunding pitches fail to reach their funding target. Crowdfunding Accelerator is an eight week ONLINE programme designed to make it quicker and easier for you to run a successful crowdfunding campaign. The programme:

  • takes a step-by-step approach, focusing your effort on the things that really matter
  • provides specifically prepared content focused on each aspect of your crowdfunding campaign
  • supports you with programme workbooks, handy-to-use templates, additional resources and proven tips
  • encourages peer learning, support and motivation through a closed Facebook Group
  • facilitates the actions needed to prepare your campaign through weekly “homework”
  • culminates with “Pitch School” where each participant pitches their campaign and receives tailored feedback
  • significantly improves your chances of crowdfunding success

What participants say about Crowdfunding Accelerator

“Hatty is a great teacher! The rich content of the course kept me interested and helped me understand how crowdfunding fits into various financial offerings. This course has given me confidence on how and when to organise a campaign.” 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

“The motivation I felt during my time on Hatty’s Crowdfunding accelerator was powerful. Hatty kept me accountable for progressing my work towards my crowdfunding campaign and gave invaluable feedback every week. Her 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

“The Crowdfunding Accelerator was an excellent way to explore the concept of crowdfunding in a real hands-on and practical way which resulted in having everything I needed to proceed.” Claire Timbrell, Co-founder The MacGuffin Project

“You have really helped me address my ideas and improve my plans. The support has met my expectations which were high”. Adalberto Battaglia, Founder Quinto Quatro

“I’ve found your feedback on the homework assignments most helpful. It feels like personal tuition.” Sue Frost, Co-founder Curamicus

“The homework is by far the best bit! It’s what made this so much more practical than just researching crowdfunding on your own, because you end up with everything you need to proceed. Even if you don’t proceed, the homework definitely focuses you on what is important for your business.” Claire Timbrell, Co-founder The MacGuffin Project

“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 was a delight to work with and her style was friendly yet challenging, she pushed me further and allowed my to try out new thoughts in a safe space. Her experience in crowdfunding gives Hatty credibility and she certainly knows her stuff! Despite being aimed at crowdfunding, I got so much more out of her course with regards to general marketing and sales.” Sharon Maddy-Patel, Maddy Lou Shoes

Dates for the next programme

The next Crowdfunding Accelerator starts in September 2018.

Location
This is an online programme delivered weekly in 90 minute interactive video call meetings. There is no need to travel. Simply log in from your computer (with internet access) wherever you are.

What next?

Got questions about the programme? CONTACT HATTY

Want to join the next cohort of Crowdfunding Accelerator: SIGN UP NOW

Want advice on your funding options? Book a free online funding clinic

 

Why your executive summary is your most important investment document

*** Book a place on the masterclass “How to write an executive summary that attracts investors” ***

When seeking investment for your business (or, for that matter a social enterprise or creative project) it pays to think like an investor, giving an investor the information they want rather than telling them everything you want to say.

The most important document when you first start talking to investors is your “one-pager” or executive summary. I don’t literally mean an executive summary that summarises your business plan, but rather a short, specifically written document that summarises your investment opportunity and acts as a calling card when approaching investors and angel networks. It is best to keep this to one page.

Why keep it short and sweet?

Investors (especially the serious ones) are very busy people. They have lots of potential investment opportunities hit their in-box every week. Most investors will make up their mind in less than five minutes whether your business is of interest to them.

“You have to give investors the information they want quickly and succinctly to be in with a chance of getting their attention.”

So how do you get the attention of an investor in just a couple of minutes?

The key is to give then what they want! Whilst individual investors will have their individual “sweet spot” for investments, in assessing an opportunity all investors are looking for certain key information:

  • A brief, no nonsense description of what the business is and does.
  • An explanation of the market opportunity – the problem you solve for your customers, the size of the market and the share of the market you feel you can realistically address.
  • An overview of your customers – who they are, any different groups of customers and how you find new customers.
  • How your products and services differ from the competition (and rest assured there will be competition whether you recognise it or not so, please, don’t say there is no competition!)
  • What you’ve achieved to date – investors look for businesses that are already delivering on their business model so highlight key milestones in your company’s development.
  • An introduction to your management team – who the key personnel are; their skills and experience and what they have achieved in the past.
  • Details of your business model – how you make money and whether you have a number of different revenue streams.
  • Your financials – revenues achieved to date, as well as a forecasting growth expected over the next 3-5 years.
  • Details of the investment you are looking for – how much money you want to raise, what you will do with that money and how much equity you are selling in return for the investment.
  • Oh, and don’t forget to add your contact details. If you do “hook” your investor you want him or her to be able to contact you quickly and easily to discuss the opportunity in more detail.

Think of getting a meeting with a potential investor like applying for a job

A good executive summary does the job of a strong CV. It helps you stand out from the crowd and ensures you get called for interviewJust as when you are applying for a job the first step is to get an interview. You’ll review the job description and tailor your CV to demonstrate how you are the right person for the job. So it is with an executive summary.

A good executive summary will position the investment opportunity so that it piques the interest of potential investors and gets you that all important first meeting. When you meet you can go into much more detail, and start to assess whether you want the investor on board. The discussion and negotiation really starts – but that’s another blog.

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Book a place on the masterclass “How to write an executive summary that attracts investors”

and receive detailed advice on what to include in an executive summary, a ready-made template that investors love and a free review of your executive summary.

Reserve a place on a Funding Clinic to talk about your funding options
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