Tim Mercer, CEO of Vapour Cloud, on how to best attract growth investment into your business…
1. Know what type of finance you’re looking for -
bootstrap as much as you can to retain control; consider grants for smaller pools of money, as you don’t usually have to hand anything over in return; and unlock access to more funds and advice via the private equity/venture capital route, in return for equity of course.
2. Do your research -
there’s far more information widely available online now, than there was when I began Vapour’s investment journey five years ago.
3. Build your proposition -
be clear on what your business has to offer, why you’ll stand out and the benefits you’ll bring to market. The numbers are crucial but so too is your point of difference. 9/10 start-ups fail so why will yours succeed?
4. Know your sector inside out -
investors will seek reassurance that you understand your competitors, market risks and opportunities. It’s important to have an opinion on the state of the industry too, beyond simply the facts that exist in the public domain.
5. Be ready to encounter different characters -
initial meetings may feel fairly relaxed, but the tougher questions will start as you advance further in the negotiation stages. Sector specialists will get involved too, at which point you’re not out to just impress the overall lender, but individuals as well.
6. Be prepared to negotiate -
great deals rarely come easily. If your business is only a concept, an investor is likely to be firm in their demands for significant equity – you have to risk something too. But if you’ve invested heavily in an established brand and you’re just seeking help to escalate growth, you’re right to be more protective over shares.
7. Be 'unprepared' -
i.e. don’t be so rigid in your pitch that you can’t adapt to unplanned questions that will undoubtedly come your way.
8. Accept that results will be scrutinised -
investors aren’t running a charity! A reporting focus from day one will help ensure growth stays on track.
9. Don't hide your passion, honesty and integrity -
the more you’re committed to making something work the more resilient you’ll be to knock backs along the way, which investors will want to see.
10. Be persistent -
investment might not be secured overnight, but you’ll get there!