I have had a busy couple of weeks, which has been mainly spent with a great many start-ups who I have met at a great many events such as one held recently at the splendid Rock Star Hub in the City where I sat on a panel of would-be investors. Firstly let me say that the energy and enthusiasm generated at these events is extraordinary and if you should be feeling a little depleted in the ‘oomph’ department turn up for a refill.
Due to media overkill and new crowd funding platforms mushrooming at weekly intervals there is a popular misconception that funding is easy and that a bright young thing can pitch up at any number of City Institutions with a good idea and walk away with a lorry load of venture cash. This is even less true than it was up until the autumn of 2008 when free spending European venture money was virtually sucked out of the economy and to mis-quote the Game of Thrones Winter had arrived.
However and for the less cynical of you it is still possible to raise venture capital but it is much harder and prising open the fingers of the most trusting HNI can be a bit of a trial even if you are the owner of the goose that lays the golden egg.
I must have sat through dozens of pitches in the last few weeks and listened to lots of requests for cash but the over-riding thing that has stuck me is that people in very ‘early stage’ probably need help, mentoring and nurturing before they are ready to even accept funds. Basic questions like: “how will you apply your funds” and “when will you achieve profitability” were often responded to with blank faces. If you are asking for funds just make sure you know how to apply them and be able to articulate the investor return when questioned. Funding is the life-blood of start-ups but make sure you know when and how to spend it because you won’t be given a second chance. Just to give you some context here about a hundred years I squandered my first bit of venture funding on an expensive PR Agency before I had a finished product, any customers or even any news but that was then and this is now and I am (hopefully) wiser. The moral of this story is just make sure that when asking for funds you can actually spend them wisely - if you do need help to get you to that stage don’t be shy and just ask for help -there are lots of pairs of safe hands out there
Finally then make sure that you are prepared before you start pitching and the following ammunition is essential.
1. A MOI (memorandum of investment) in readable English and preferably on one sheet of paper and something my Mum would understand
2. A PowerPoint deck of simple-to-understand slides which answer the anticipated questions unambiguously
3. A forecast that will withstand scrutiny and the set of assumptions that have been soundly thought through
4. YOUR vision of where your business is going to be in 3 years time
In closing, here are my top tips:
- Research until you are sick of it
- Practice your pitch until it becomes second nature
- Stick to your time allocation
- Don’t lift the bonnet unless asked – 36,000 feet is fine
- Don’t overstay your welcome
- Answer the questions simply and leave the tap dancing at home
- Back up all your assertions with facts