Investment Readiness
Posted on 01. Feb, 2010 by admin in Business Advice, Business News
PAUL JENKINSON, Regional Manager at Connect Midlands explains where a business should focus when preparing for investment
Wanting investment and being ready for it in the eyes of potential backers are two different things. This is being “investment ready” and is a key part of our understanding Finance for Business programme – part of Solutions for Business, the government’s package of publicly funded business support designed to help companies start and grow.
To access any type of finance requires a sound business proposition, a quality business plan and often a presentation to investors. Connect Midlands has a model for “investability” which identifies four key areas that a business wishing to raise finance needs to focus on. These are summarised below:
VISION
A company should make explicit where it would like to be in three or five years, against a number of metrics.
MANAGEMENT TEAM
A strong management team and those with a successful and relevant track record will generally raise finance easier than those without. The management team is particularly important since they are charged with the responsibility to exploit the market opportunity and drive product to market to generate sales and value.
ROUTE TO MARKET
The business plan should define and size a target market of customers and make explicit through which channelsthese will be accessed. Investors are always looking for progress with customers such as sales, trials or orders to demonstrate pull from the market place and to de-risk the proposition.
ACCESS TO FINANCE
A start up or early stage company needs a good understanding of finance options, of investor requirements and of the fundraising process itself. Knowing how to make a pitch based on the investment opportunity rather than on the technicalities of the product or process is essential.
Finance comes in three basic forms: grants, debt and equity which I’ll focus on. Typical sources of equity are the founders and owners, friends and family, business angels and venture capitalists. Friends and family typically offer up to £20K; business angels £20K to £1m, often in syndicates for the larger amounts and venture capitalists from £100K to the sums seen at Connect Midlands’ Investment Conferences which can reach up to £5m.
With all finance, the funding providers are looking for a credible management
team with the drive to make it happen; a good differentiated market opportunity with defensible USPs; a scale-able business model; clear routes to market; a good understanding of the finance required and an indication of when breakeven will occur.
HOW TO BECOME INVESTMENT READY
As a not-for-profit organisation, we can help provide science, engineering, technology and high-growth companies with the tools they need to develop and raise investment through our Understanding Finance for Business programme.
Companies can access different levels of support from Understanding Finance for Business depending on their needs. The Amber stream of the programmes is for entrepreneurs at an
early stage seeking their first round of company funding and includes workshops offering an intensive two day examination of what investors are looking for as well as workshops introducing the world of investment finance.
The Green stream is aimed at more experienced entrepreneurs or businesses and offers one-on-one mentoring from industry experts who work with the company to prepare them to make
investment finance deals. Connect can also provide assistance with transaction fees in some instances including legal, due diligence or other corporate finance fees.
Through Understanding Finance For Business, companies developing strong, investment ready propositions may be selected to present at our exclusive investment raising platforms, such as the annual Connect Midlands Investment Conference.
If you believe you could benefit from investment, get in touch via www.connectmidlands.org or call us on 01509 228 702.
