To put it mildly, 2020 was a challenging year for everyone in the business sector. Despite the uncertainties however, 2021 brings with it a glimmer of hope, especially when it comes to investment. Throughout this article, Shane O’Hanlon, Funding for Growth Manager at InterTradeIreland will discuss how to secure investment for your business in 2021.
Savvy investors are always on the hunt for opportunities and with the chance of a global economic bounce back on the horizon, there are ‘potentially’ plenty to be had. The Irish Venture Capital Association (IVCA) reported in November that venture capital funding had seen a 41% increase in the third quarter of 2020 despite the impact of Covid-19. It saw funding into Irish businesses reach €192.8m in comparison to €136.4m in 2019. This followed a record second quarter when funding increased by 58% and a 39% increase in the first nine months of the year.1
If securing investment is high on your agenda, you’ll need to show investors what makes you different – and why they should play a part in your success. Whether you’re a start-up company hoping to gain seed capital or you want to take your business to the next level, you’ll need to understand what investors are looking for.
Follow the tips below to find out how you can invest in your company’s success and gain investment this year…
Shape-up your business plan
The objective of every business plan is to raise money. In order to do so you have to convince potential investors that your company is a worthwhile investment. The way to do this is through your business plan, so it’s important to get it right.
First impressions count, which is why you should pay particular attention to the presentation of your business plan. You’ll want it to be laid out in a clear and precise manner that’s easy to follow. Try to focus on your company’s unique selling points, after all you want to keep reader’s attention from start to finish.
Ensure the logic, proposals and assumptions are consistent throughout your business plan. Make sure to be open and honest, if you misrepresent something investors will be able to see through it. We advise entrepreneurs to use ‘the business cube’, a planning tool for structuring your plan.
Not only is this helpful for start-up companies, but also more established businesses searching for investment. Your business plan is crucial, so make sure it’s up to date and is an accurate reflection of what you have to offer.
For start-ups and early stage business the Seedcorn Investor Readiness Competition is the perfect chance to get ‘investor ready’. The Seedcorn contest mirrors the real-life investment process. Participants, who are in with a chance to win a share of a €280,000 cash prize fund, can secure expert feedback on their business plans and pitches, improve their investor readiness and gain exposure to investors, all while boosting their firm’s profile.
Look to Equity Crowdfunding
Equity Crowdfunding is a great funding source for High Growth Potential Start-ups and Growth Stage businesses across the island of Ireland. Crowdfunding platforms allow companies to raise investment via FCA regulated online platforms from private investors. It basically gives small investors the opportunity to access and invest in high growth potential businesses.
Although the level of investment commitment can be as low as £10, the average funding per campaign in the Crowdfunding segment could amount to £12,296 in 2021, according to Statista’s data on Crowdfunding.2 For early stage companies, accessing capital via these platforms can greatly extend their sources of potential growth capital beyond founders, family, friends, angels and venture capital.
At InterTradeIreland we’ve compiled an Equity Crowdfunding Resource which can provide information to businesses around raising equity capital this way. Some important things to remember are; it’s not as simple as ‘if you build it, they will come’, you’ll need to bring a number of significant committed investors yourself, which may be upwards of 50% of what you plan to raise. In order to do so you’ll need investment leads beforehand who can generate interest in your platform campaign.
Make sure to get your valuation just right, most equity Crowdfunding platforms will not allow companies to accept investor commitments if they have not hit their fundraising target. Approach Crowdfunding with the same level of professionalism as you would with any other campaign. This means having a well thought out PR plan and an experienced account manager.
Perfect your pitch
For both early stage businesses and established ambitious companies looking to grow, perfecting your business pitch is crucial. One common mistake when pitching is missing the point of the presentation. For example, if you’re pitching to raise finance, then how will the investor make a return?
Your job as the presenter is to excite the viewer, not educate them. And be careful not to make the common mistake that one pitch fits all, each presentation should be tailored to both your audience and the sale being made. In advance there are two things you’ll need to focus on, preparation and structure.
As the saying goes, ‘fail to prepare and prepare to fail’, try to plan ahead as much as possible. Decide who will be presenting, will there be more than one? And if so, practice handovers and introductions. Try to research your audience, anticipate the questions they might ask and cover these in the presentation. In terms of time, keep it short, 15 minutes should be long enough.
When it comes to structure, your presentation should have three parts – an introduction, main body of the pitch and a conclusion. Don’t make the mistake of filling your slides full of text, you want the audience to be listening and concentrating on you. Finally, film yourself presenting, review and practice until its perfect.
If you need more advice on perfecting your pitch, you can avail of our Equity Advisory Clinics. Hosted by lead equity advisor Drew O’Sullivan, companies can receive free one-to-one advice on pitch practice, equity investment, fund raising and a review of their business plan.
Locking in investment
There are a wide variety of investors out there and a variety in the type of investments they make. If you’re an established business you may be looking for venture capital, this usually means a greater level of investment. They will almost certainly want to take on an active role in the company so make sure the VC funder is a good fit for your business. In addition, Equity Crowdfunding is another good option.
If you’re a start-up company perhaps looking for seed investment, then angel investors can bring lots of monetary benefit. They may also have a broad range of contacts to help your business succeed. A great chance to meet investors is at InterTradeIreland’s annual Venture Capital Conference, taking place virtually this year. It’s a must for entrepreneurs, venture capitalists, business angels, investors and anyone with an interest in venture capital.
Before meeting with investors, try and think what your investor wants from the arrangement and keep this in mind. Some may need a quick exit door in order to generate return and others could be there for the long haul.
If your goal is to pass the company on to the next generation, then equity investment may not be for you. If you are prepared to take an investor, what percentage of the business are you willing to ‘give away’? Is your goal to grow the company, sell it on and start again, or maybe you want to keep the business in its entirety. These are all things you need to consider before searching for investment, as having a solid long-term plan can ensure both you and your investor get the very most from your union.
Looking to the future…
2020 brought immense challenges for businesses, but going into 2021 it’s important to look to the future. Even during uncertain times, investors are out there, and you can invest in your company’s success by securing funds for your business. Whether it’s perfecting your business plan or deciding which investor is right for you, we can provide support and advice. For more on how we support funding
2 Data taken from Crowdfunding - United Kingdom | Statista Market Forecast