Showing results for 
Search instead for 
Did you mean: 

How to get your business fighting fit to raise funding

How to get your business fighting fit to raise funding

How to get your business fighting fit to raise funding

You wouldn’t enter the ring without due preparation, so it’s important to know you’re fighting fit before you start seeking investment. Going several rounds with investors and getting rejected can leave you feeling discouraged. But how do you know when your small business is ready to raise investment? And are you seeking business investment for the right reasons?

To find out, we interviewed two of the UK’s most inspiring entrepreneurs – innocent drinks and JamJar Investments co-founder, Richard Reed, and Social Chain’s CEO, Steven Bartlett. Both have more than their fair share of funding experience from both sides of the pitching process, as founders and investors.

As our Plusnet Pioneers, Richard and Steven share their four most valuable, and, somewhat surprising, tips to ensure your business is fighting fit for funding.

Richard and Steven’s four steps to get your business ready for funding

1. Have a product or service ready to show investors OR fake it until you make it

You might be in a position where you need finance to make your product or service a reality, but something is better than nothing. Richard says: “With innocent drinks, we raised funding before we had a product or even had a business name.

“We said we were going to start a smoothie company, and we had a very convincing business plan about what this smoothie company would be and where it would be sold.

“What did I do to get investors on board? I faked it.

“We bought different bottles of smoothies, poured them into clean bottles and made up some labels showing what our packaging would look like. We had the cheek to have investors try what was then our competitors’ smoothies, and pretend they were ours.

“I don’t advocate doing that when pitching to investors, but entrepreneurship is about doing whatever you need to do to get it done and get that funding in the bag. We were raising money for a smoothie company, so of course we had to show them smoothies.”

2. Assemble a strong team for your fundraising journey

When seeking investment, you’re not just pitching an idea to investors, you’re pitching yourselves and Richard strongly believes that “first and foremost, your team is the most important aspect to getting an investor to back you.”

Now as a serial investor and the co-founder of his own investment company, JamJar Investments, Richard says: “Investors are looking for people who are passionate about their business. They’ve got to have the drive, resilience, intelligence, and the ability to make stuff happen.

“Investors are looking for founders who have got that wonderful combination of ambition, altruism and energy. And then, ideally, that founder isn’t doing it by themselves but as part of a team. That team will ideally consist of people who are really good at different things.

“A big driver of our success at innocent drinks was that there were three of us. None of us would have been able to do it by ourselves. Together we made one good business person. We’re massive believers in teams that share the same values and bring complementary skills.”

For Steven, experience taught him a vital lesson about having a good team you trust: “I invested in a great business idea but the team wasn’t compatible, and I lost a lot of money. It made me realise that it doesn’t matter how good the business idea is or how much you love the brand or the product, it all comes down to having great people around you who are passionate about making the idea happen.

“No business idea is born perfect, so you’re going to have to rely on intelligence and your team to get it there.”

3. Create a believable business plan

The business plan is often seen as the most important aspect of a successful company – but how important is it really in getting investors to fall in love with your business and invest in you?

Richard says: “You absolutely are going to need a business plan and it’s going to have to be detailed enough so investors can see you’ve thought it through and run the numbers.

“You can’t just make things up in your plan - I say this, even though a business plan is based on assumptions. It’s about predicting the future in an ambitious but sensible way as projections in a business plan don’t always become a reality.

“Don’t make your business plan so long or detailed that you’re not focusing on what your business actually is, what you’re going to do, how big it’s going to be, or how you’re going to do it.”

However, Steven had an alternative approach to writing his business plan: “There was no formal business plan for Social Chain. My business plan, on my mother’s life, was written on a napkin in a café in London. That napkin was photocopied, and it was put on a piece of paper in the investment document.

“The plan included:

A. Here’s how much money I need for my business

B. Here’s how much money my business would make; though roughly no one knows

“I’m honest enough to tell my investors: ‘I have no idea what we’ll be doing in a year’s time’. As a founder, you need to have a rough idea of the direction that your business is going in and a vision for where you want to take it, but the magic is to move with the opportunities.

“At Social Chain, we wake up in the morning and new information decides the business direction because social media is always changing. So, there’s no business plan, and if I write one in the future, it’ll be on a napkin again!”

4. Only raise funding if you need it – many businesses have become successful without it

Steven recommends that small businesses should only go after funding if they really need it: “Don’t raise investment unless you’re really confident that your idea won’t have tough competition in a few years.

“If you are already running a profitable business, then I honestly would tell you not to rush into raising investment and keep building on your own success. Taking this approach builds a sustainable business and one that’s not based on a fixed set of investor terms. If you can grow from your business success, from your own profits, from your own revenues, then you should hang on for as long as you possibly can before getting involved in raising investment.”

Interviews were conducted as part of our Plusnet Pioneers programme, an exciting content series to help small businesses grow and reach their potential. For more information on Pioneers please visit our Plusnet Pioneers section. 


0 Thanks