Funding 101: A crash course in how to secure investment
6 min read
31 May 2016
Having successfully secured backing from Dragons’ Den’s Deborah Meaden at the tender age of 18, and off the back of a £2m crowdfunding campaign that exceeded its target in just five days, Jordan Daykin, CEO at GripIt Fixings offers his top tips on raising capital for your business.
Whether you’re looking for seed investment or funds to support international expansion, raising capital can be a long and frustrating process. You need to be thick-skinned and ready to accept some setbacks. But there are plenty of willing investors out there if you know where to look, all waiting to jump on the next big thing.
Read more about getting a Dragon to invest:
So, how can you make the journey to funding success smoother? Here are six top tips to consider:
(1) Have a plan
There is no such thing as “winging it” when it comes to investment. No matter how good your business or product idea is, if your prospective investors can’t see evidence of a well-thought out strategy, they won’t touch you with a barge pole.
You should be ambitious with your growth plan and show how your business will create commercial value and a return on investment over time, but be realistic. Inflated figures and valuations will only make investors doubt your understanding of the industry. Don’t be scared to point out potential risks either – it only emphasises how many possibilities you’ve considered.
(2) Prove you’re market-ready
Theories are great, but proof of concept is where things get really interesting. If there’s any way you can bring a prototype to an investment meeting, it can really help to make the business tangible.
Even better, if you can bootstrap your business and demonstrate its capacity to generate revenue, you’ll end up with a better valuation and leverage to negotiate deals. When I pitched to Dragon’s Den for example, GripIt was available in 1,400 stores around the UK and on track to turn over £750,000 that year. It certainly helped in piquing interest, even when the meeting didn’t go quite to plan!
(3) Protect your USPs
One thing every capital-seeking entrepreneur needs is a unique selling point – what is it that makes your business stand out from competitors? How are you different? What are you bringing to the market?
For some, it may simply be that you’re truly the first to have come up with your product or service, or that you have a very different take on a well-known issue. For others, it might be the experience and personalities you have within your team.
However, if you’ve got a business that involves a product people could try to copy, protect it before you pitch to investors – once you present your idea, it’s considered public and is no longer eligible. We were granted our patent for GripIt Fixings in 2012, long before we were looking to raise capital, to ensure we had time to develop our brand without fear of people swooping in to steal the idea.
(4) Get personal
They say beggars can’t be choosers, but it is really important to find an investor that you a) click with and b) can develop a strong personal relationship with. Having someone who believes in you and your vision, and who’s not just in it to make a quick buck, will not only help provide the funds for growth but be your ally.
I have a fantastic rapport with Deborah – she’s really helped to shape my understanding of the business world and is the best mentor I could have asked for, so be brave enough to hold out for the right fit.
(5) Remember, people invest in people
It’s not just your business that needs to be in tip top shape – as the face of your company, you need to be aware that you are the investment, and investors are buying into you as a brand. If you’re sloppy, underprepared or don’t know your business inside out, you’re in for a bumpy ride.
Even the best entrepreneurs can draw blanks when put on the spot, so prepare your pitch to perfection and make sure you get tested on how you respond to more difficult questions.
(6) Patience is a virtue
Finally, but certainly not least, don’t give up hope. It can take a long time until you’re successful, so if one door closes, find out where the next one has opened. Investors value determination and dedication, so no one’s going to look down on you for exploring all avenues.
Jordan Daykin is CEO at GripIt Fixings.
Foreign investors love Britain. According to UK Trade and Investment (UKTI) statistics, the UK has an estimated stock of over £1tn in foreign direct investment (FDI), coming third globally after the US and China.