6 Key Thoughts Along The Fundraising Journey (No1)
November 9, 2011 Leave a comment
You Think You’re Ready To Talk To Investors But You’re Not
Sifting through a volume of investment enquiries, trying to get to ‘the good ones’ can be quite a burden for angel investors, fundraising individuals and VCs alike. I say burden because to engage with company founders and entrepreneurs whose businesses are not ‘investment ready,’ let alone ‘deal ready,’ is not the most rewarding way of spending your time. The problem is that most who come with business proposition clutched firmly in hand believe that they are ready to talk a deal and deserve the time and attention of the investors they pursue.
If I was to put a percentage number from the businesses that I see that I would take to investors, it would be between 5-10%. Which leaves a lot of businesses fumbling around with the misguided belief that investors should be drooling over their business idea.
A lack of understanding, training and experience as to how to configure your business to attract investment is a very real issue and the main stumbling block for entrepreneurs and founders as they seek finance from business angels. Colin Willis of the investment acceleration program Ignite100 says, “In the UK there is not an equity gap but an execution gap.” I wholeheartedly agree. The only experience many have of raising finance for their business is perhaps the sourcing of a bank loan, or maybe funding from friends or family. The professional equity investment community is a whole new level of experience with its own unique set of unwritten rules. A simple business plan may have been enough to convince the bank manager for a loan in the past but to get money from angel investors, your business investment proposition needs to explain and show a whole lot more. Knowing how to execute an investment proposition is the key component missing from most founder approaches to investors.
It wouldn’t be right to leave the article here without suggesting some form of cure for the problem. One of the easiest ways to get investment ready is to make contact with your local angel network. The following page on the British Business Angel Association outlines the angel funding process (here) and elsewhere in the site UK angel networks are listed. Be prepared, there will usually be some sort of fee involved in helping you develop your investment offering.
The next 5 articles will follow soon.