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Scaling up amid a background of constant fundraising

E Fundamentals was initially funded through family and friends, but has explored other avenues as well.
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E Fundamentals CEO John Maltman talks Real Business through the various alternative finance measures the business has considered, and what methods he used to compare them.

E Fundamentals is an ecommerce analytics platform that aims to help brand owners by improving the sales performance of their products on retailer’s websites.

The business’ initial target clients were the best brand names in the food and drink industry. Naturally, these big brands would want a fully built product, not a minimum viable product, and the business has to build and operate on a very tight budget against a background of more or less constant fundraising.

“We knew we were entering a competitive market but saw a clear gap. We built our service around the needs of sales and marketing professionals using ideas and language already familiar to them,” said John Maltman, CEO.

“Clients love our service because it is intuitive, focused on the individual’s work and highly actionable. When we started to win major brands as clients we knew we were on the right track and it was time to go for growth in the UK and Europe.”

The business has ambitions of expanding into new sectors and other European markets, and to do so it will need finance.

The fundraising

E Fundamentals was initially funded through family and friends, but has explored other avenues as well.

“Along the way we have attracted angel investors and most recently we worked with Angels Den,” said Maltman.

“Although fundraising has consumed a lot of time, it has also brought more than simply capital as we’ve tended to attract investors with valuable experience and connections.

“Our next round will be a growth round and almost certainly involve a VC. We are getting a lot of interest. Of course, a VC will have expectations around reporting, governance etc, but we are already built to provide that.”

The business has also set up an invoice finance facility but hasn’t used it as it was too expensive, and has considered asset finance, but creating assets out of a software development has been a challenge and the market was limited.

“As they say you have to ‘kiss a lot of frogs to find a prince’ and I’ve been surprised by how many VCs see the process as a one way sell. There are some I’ve met that I wouldn’t work with based on the first meeting,” said Maltman.

Making a decision

When comparing funding providers, Maltman considers a number of criteria, including track record, reputation, access to expertise, and negotiation.

His advice to other businesses seeking finance is to treat every introduction as if it is your potential funding breakthrough and prepare accordingly.

“Decide quickly which contacts you are going to follow up, as wasting time on poor quality prospects is not good for you or them. Investors look at three things initially, people, product and market,” he detailed.

“Your initial pitch must show you have good people in place, have a product that meets a well understood need and that the market for such a product is sizeable.”

Maltman also warned that underestimating the time frame is something businesses should watch out for. “An investment process is lengthy as it needs to take in a lot of considerations,” he said.

“Even if you secure the money you may not receive it when you’ve planned for it, so you need to be prepared for that to ensure you still have money whilst deals are underway. Having a healthy cash flow is about managing money both ways, not just when it’s about to come in.”

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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