As a start up it is a significant milestone to raise funds from a venture capital fund firm. Raising funds is one of the most vital steps for a UK start as it expands its business – both to funds product development, hire an excellent team and fund a go to market strategy.
VC funds offering startup funding in the UK can be just what a young startup venture needs to navigate financial stability and business growth. If you as a start up look to raise money from a venture capital fund in the UK, what should you be thinking about to ensure you are prepared?
- One of the most important things is to ensure your start up has a compelling story that generates enough interest among potential investors. Even if they succeed, some startups simply will not get enough investment to deliver the kind of potential future returns and scalability that venture capitalists. Show the venture capital funds that you are solving a large problem with a unique solution. Give thought to raising a small fraction of money from friends and family first to reach the necessary milestones, making your startup more presentable to venture firms.
- Documentation is another aspect that demands complete attention. Prepare a 1-2 page executive summary of the business agenda and a presentation and thoughtfully explain the business plan in detail. For instance, it should cover the business plan of action, model, target market, financial assumptions, and projections. If you are not a good writer, it is always okay to ask a friend or an expert to document the same.
- Having a core team is extremely critical to venture capitalists. That is why it makes a lot of sense to articulate your industry experience and background clearly. For example, do the founders or creators have meaningful equity or capital invested in the startup? A dynamic team can impress the investors offering venture capital in the UK. You have a committed team to take your vision ahead. Indeed, you can identify any loopholes/gaps to be filled in the future.
- A team of advisors always turns out to be reasonable as they are experienced in raising capital, whether industry experts, lawyers, board members, accountants, or professional investors.
- Further, your proposal needs to have a target list mentioning the key criteria like the amount to be raised, industry sector, investment stage, potential investors’ contact details, and competitors. Remember that details matter, so make sure to know your models and numbers inside out while preparing for your pitch. Venture capital funds firms will always be interested in knowing about your market conditions, credentials, data, plans for getting ahead, and sharing something they still have not heard of.
- Practising your pitch again makes a lot of sense. Try to find a friendly audience, helping you identify loopholes and gaps in your pitch. Make sure to have a 30-60 seconds, three-minute version, and a fifteen-minute version of your pitch. You must be able to narrate your vision succinctly and in fluent English. When you make your actual presentations, arrange them so that you can include suggestions and feedback in subsequent pitches. Always know the fact that if you are not able to clearly explain your startup and how it is different from others, venture capitalists are often out of the door. With this, you need to know your competitors in the market because assuming that there is no competition is often the wrong answer.
- Review the capital structure. Yes, you read it right! If you really don’t know the basics of your startup shares, then ask your financial expert to explain them to you. Never leave any of the equity arrangements unwritten.
Ultimately, if your startup pitch doesn’t go well and you receive an unpleasant phase, be ready to proceed. It is okay to find a suitable seed enterprise investment capitalist wishing to carry out due diligence once again.
Got any questions? Feel free to leave it in the comments section.