Five tips to gain investment

24/10/10

On 29 October 10, Paul Grant, founder of the The Funding Game is running a workshop in the Centre: ‘Funding for fast growth’. The session will help you learn the tricks of the trade when applying for capital funding, find out about the different funding options available, and how best to engage with investors.

Find out more and book your place

In anticipation for workshop, we asked Paul to give you his tips on gaining investment:

1. Never go out for investment too early

If you have not reduced the risk enough for the investor, and you’re unclear about your plans, it will blow your credibility. It is very difficult to get an investor to re-visit a deal they have already seen. Also, if by some very slim chance you did get investment on a deal that is not ready, the chances are that the equity released will be uncomfortably large.

2. Spend more time proving the concept works rather than working on your business plan

Many entrepreneurs become obsessed with the plan - and investors do not invest in plans. They invest in actions already taken that can show that the business could succeed. A few orders or a strategic agreement with a credible company could be worth much more than writing a 100 page business plan.

3. Borrow team credibility by recruiting an experienced non-executive director

There are many companies out there that have good ideas and have ticked all the boxes, but do not have a credible team. Many investors back the jockey more than the horse and need a team that have the skills, experience and industry contacts. It is worthwhile finding a great non-exec director with relevant sector experience and contacts, increasing you chances of getting funding and success in building a fast growing, profitable company.

4. Be crystal clear about your unique selling point (USP)

If you can’t articulate a clear USP about what your company does compared to the competition in one or two lines you are likely to quickly lose interest from an angel investor. Also, when thinking about your USP, make sure it is sustainable and has a long shelf-life. Amazingly, few companies can boil down the key reason as to why their company should exist into one or two lines.

5. Plan your exit strategy

One of the biggest complaints I get from angel investors is a lack of an exit strategy for their investments. Without this there is no chance of making a profitable return from their investments. Yet few entrepreneurs give the exit plan much thought beyond a comment about 'listing on the stock market'. It is therefore very impressive to an investor when an entrepreneur can talk about the exit strategy, giving the why, who, and when it is likely to happen.