Paul Grant’s Five Tips for entrepreneurs trying to gain business investment. Paul is founder of The Funding Game
1. Never go out for business investment too early
2. Spend more time proving the concept works rather than working on your business plan
3. Borrow team credibility by recruiting an experienced non-executive director
4. Be crystal clear about your unique selling point (USP)
5. Plan your exit strategy
When you send a business plan to an investor, remember that the purpose is not to sell your product or service, but to sell you and your business model, says Martin Zwelling in this Forbes Magazine feature. Click here to read more on what to avoid.
The relationship between investor and entrepreneur is like a marriage but one with a planned divorce, says the Halo Business Angels Network. Click here for their 12 Tips for getting the best out of the relationship.
From the Hampshire Workspace website, a post on how to impress investors and attract business investment with your start up and where the young tyros from The Apprentice go wrong. Click here to read more.
Paul Graham is the co-founder of the hugely successful US seed capital firm Y Combinator. He says, “You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.” Another important point he makes- and one that Angels 5K know only too well- is that “The odds of getting from launch to liquidity without some kind of disaster happening are one in a thousand.”
- Single Founder
- Bad Location
- Marginal Niche
- Derivative Idea
- Hiring Bad Programmers
- Choosing The Wrong Platform
- Slowness In Launching
- Launching Too Early
- Having No Specific User in Mind
- Raising Too Little Money
- Spending Too Much
- Raising Too Much Money
- Poor Investor Management
- Sacrificing Users To (Supposed) Profit
- Not Wanting To Get Your Hands Dirty
- Fights Between Founders
- A Half Hearted Effort
Read all the reasons in Paul Graham’s full essay.
More Tips For Enterprising Companies Seeking Investment
The Government’s Business Growth Service, known as Growth Accelerator, offers tailored advice and support to help you grow your business particularly if you are bringing a new product or service to the market. This includes coaching, consultancy, mentoring, training, access to finance and export advice. Click here to find out more.
Tip: Investors favour companies who have undergone the Growth Accelerator process. Request a free consultation.
Investor due diligence
Investors will undertake due diligence on your company prior to deciding to invest. Due diligence is a process that verifies and confirms statements and views about a business and its prospects.
Tip: You should also undertake due diligence on the potential investor, checking out their record of support (or otherwise). This may be a challenge since angel investors do not generally have a website or publicly available information. However, someone should know them, so do your homework on potential investors and attract the best ones into your company.
Time to investment
You should allow a year from planning to completion of an equity investment. Deals can and have been done much quicker than this. A typical time frame is three to six months.
Tip: Allowing a lengthy time period will help you. You do not want to be in a position where you need funding urgently and would be on the ‘back foot’ when negotiating the terms of the investment – being ‘needy’ will put off an investor.