Being investment-ready is key to getting funding. Before approaching any investor have a look at these key requirements.
You are up against a lot of competition for business investment. Some may be better prepared than you to give the potential Investor confidence that his investment will be well spent and payback a healthy return.
So what can you do to be ready for an Investor and how can you give yourself the best chance against the competition?
Okay there is a ton of information on this available, including on this site so I’m not going to go into how to do a plan (see the links below). Just to say that you will benefit from having one:
- Putting a plan down on paper forces you to think through what you are doing. The market, your offering, sales & marketing, putting together an experienced team, the business model and finances
- It provides a basis for discussions
- Shows Investors that you are professional, serious about the project and are thinking of every aspect of the business
- Investors cannot see everyone; they will want to first have a few pages (Exec Summary) of a business plan and then follow-up the ones with which they are interested.
If an existing business:
- Make sure that what you are doing at the moment is profitable, if not profitable show why it will be
- Build your revenue with a sales drive to show the business to its best effect
- If based on a new type of product, make a prototype
- Show it is not just a good idea, but that it will actually sell by getting positive customer comments, or letters of intent to order.
- Produce a market survey that supports your product or service. Don’t simply say “everyone I’ve asked likes it”.
- Be able to explain in a couple of sentences what your business does, its advantages over the competition, how it will make money and who its customers will be. Have evidence to hand to support your numbers.
- Know what you are going to spend any investment on. Make sure that it’s not just to pay you a salary, or all thrown at marketing.
- What role will you expect the Investor to take, some are looking for an active role in the company, some only expect to give advice, very few will consider just giving funding and stepping back completely.
- How will the Investor get a return? A sale of the business, a buy back of shares, interest /dividend payments? Over what time?
- Look at government Investor incentives. In the USA there are quite a few States that are trying to attract businesses, basing your company in that area can give tax advantages to the company and potential Investors.
- In the UK there are the EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme). These are attractive to potential Investors and may make the difference in choosing your opportunity or someone else’s.
A quick way of getting a foothold on to these incentive schemes and be able to show Investors the potential, is to get a statement from the Inland Revenue (HMRC) that your business is likely to qualify for the scheme called a EIS Advanced Assurance
Finding investment is not necessarily quick. Realise it will take time and energy. Be persistent and turn over every stone to find the right investor that understands your market and is excited by the team and opportunity that you have.