Scotland’s premier technology investor showcase, Engage Invest Exploit (EIE) takes place this week. It brings together Scotland´s most promising innovative, data-driven high growth companies, seeking funding from seed capital to series A and beyond. With this in mind, there is no better time to consider whether your business is ready for investment. To help you determine your ‘readiness for investment’ we have put together a handy quick guide.
Prepare for investment
The aim of the game is to build confidence with potential investors. Investors are buying into you as much as your business and expect you to be prepared, confident your business will succeed, optimistic (yet still realistic) about future potential/performance and true to your business’ mission.
The first step is to get your paperwork in order including your financials, business plan and projections, market research as well as your pitch or investor slide deck. Unless it’s a family and friends round, you are going to have to pitch and, quite possibly, will receive a number of rejections. When faced with rejection, don’t take it personally – refine and return to the investment trail with greater determination.
You should also scope the investment proposal:
- What is it you are offering?
- How much of it is being offered?
- What will it cost?
- Are there any tax advantages in taking it?
These are all questions you should have the answer to. Remember, taking on too little or too much investment can be dangerous so understanding your requirements is key.
Identify the right investors
View your investors as partners. There is a real exercise in identifying investors who are the right fit for you and your business. If you, and your investors, were to be in a room and the only person you can point to that contributes to the success of your business is you, it will be a long and fraught road to make your business a success. You should never prioritise valuation over the fit, ethos, familiarity and added value of investors. In fact, an overvaluation can be problematic as you may find it harder to show sufficient growth in future to support an increased (or even a stable) valuation.
Negotiate the business handcuffs
Remember that investors don’t usually just give you cash. Their investment will ordinarily come with conditions attached. It is important to negotiate these business handcuffs in order to ensure your business is sufficiently empowered to grow and achieve its full potential.
Tap into your ecosystem
Entrepreneurs in Scotland are fortunate to be growing their businesses in a supportive ecosystem and during a period in which the private equity community in Scotland has created two unicorns (Skyscanner and FanDuel), with undoubtedly the next wave in the pipeline. Tap into your ecosystem. Talk to others. Learn from them.
When determining the readiness of your business for investment, the message is clear: Prepare; Identify; Negotiate; and Talk. And with this acronym – PINT – in our heads, we look forward to catching up with you all at EIE and to hearing more about the thriving businesses you are developing right here in Scotland.
For more information on our team and experience we have, download our brochure now.