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First-hand tips to impress investors and secure equity finance

How do you impress investors when seeking equity finance? It's all about the management teams, and making sure you've done the numbers.
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How do you impress investors convince them you are worth investing in? We caught up with some experts who explained how to win pitches.

“Equity funding is probably the best option for businesses with long-term, ambitious growth plans,” explained Angelika Burawska, chief operating officer at the Startup Funding Club.

“Equity funding does not have to be repaid, there is no interest on it, investors will sometimes provide active support and more funding can often be accessed in the future.”

We caught up with Burawska and Julie Glenny Glenny, investment director of maven Capital Partners, to find out how to give an impress investors when looking for equity finance.

The Startup Funding Club deals exclusively with equity finance, whilst Maven covers a number of flexible funding options.

What kinds of businesses do you see? Is there a “typical” business or something they all have in common?

AB: “Startup Funding Club operates in the high risk/high return sector. One of the ways of reducing the risk is diversification of our investments.

“For this reason, we work with businesses in all sectors, demonstrating a variety of characteristics – from food and drink to life science, from concept stage to revenue making businesses. There are some trends, particularly in the tech sector, but there are no typical businesses as such.”

What sort of ideas have been successful in the past?

AB: “Any idea can be successful if executed properly by the right people. A really successful business is the money-making business that brings returns to shareholders in terms of money and/or growing equity value that can be monetised at some point.”

JG:
“Good ideas come in all shapes and sizes but success is generally always driven by a capable management team. We also find that successful businesses are often the ones that find a niche or offer a disruptive proposition which is capable of scalable growth.”

What are you looking for in a business, what would convince you to offer them finance?

AB:
“First of all, we are looking for the right people who have drive, passion and perseverance as well as being open minded, flexible and able to make decisions quickly. Of course, the right market-product fit is a must.”

JG: “Maven has invested in both established SMEs of scale with annual operating profits of around £1m, as well as in significantly earlier stage firms where perhaps losses are being incurred in the initial years of trading.

“The common thread across all of Maven’s investments is a strong management team with sector expertise or previous experience of growing an SME and the capability to deliver growth in earnings”

What tips can you give to businesses pitching? How do you impress investors?

AB: “A strong business that is pitched poorly will not find backers. Our advice to entrepreneurs is to make sure that you are able to explain the concept of your business in a simple way.

“Keep it short but informative. Select only the information that matters and that explain why there is a good reason for your product or service to exist. Investors are looking for money, so tell us how you’re going to make it.”

JG: “We cannot emphasise enough the importance of producing a comprehensive investment proposal which should provide information on the company’s financials: historic trading performance, three years projections along with underlying assumptions on turnover growth, gross margin, overheads, and cash flow as well as outlining how the funding will be used.

“A knowledge of the market and competitive space is also important – being able to articulate the opportunities and threats and how you plan to overcome these shows clear business vision. Don’t forget also to outline any aspirations around an exit plan as this will help align investors’ interests with your own from the outset.”

This article is part of a wider campaign called the Scale-up Hub, a section of Real Business that provides essential advice and inspiration on taking your business to the next level. It’s produced in association with webexpenses and webonboarding, a fast-growing global organisation that provides cloud-based software services that automate expenses management and streamline the employee onboarding process.

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About Author

Letitia Booty

Letitia Booty is a special projects journalist for Real Business. She has a BA in english literature from the University of East Anglia, and since graduating she has written for a variety of trade titles. Most recently, she was a reporter at SME magazine.

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