I learnt how to excite investors

Overview

Understanding how to attract investment into a business, particularly from business angels and venture capitalists.

The challenge

Investors receive many approaches, yet make relatively few investments. How can you find and attract investment, if your business needs money in order to grow?

The solution

I co-founded Actinic in 1996. After a year or so of self funding and borrowing from friends and relatives, we raised £165,000 from a business angel investor, then later £1,500,000 from a venture capitalist. Finally, we went public on the London Stock Exchange, raising £25,000,000. Since then I've become an investor myself.

We had a workable business proposition for supplying a boxed ecommerce software package to small businesses wanting to sell online. We also had a good plan that covered finance and marketing.

We learnt that it's important to excite investors about the chance of making a lot of money, and also provide assurance that their risk is contained. After that you need to explain how the money will be released. That's what they care about, and addressing those concerns forms the basis for all fund raising.

The questions that the investors asked included:

Are the management team credible? We showed a track record of previous achievement, but if you don't have this it's best to get experienced people involved on your board to add credibility.

Is the business itself is credible? We demonstrated this with sales figures and a database of customers.

Are you totally committed? You must be devoted to the business, and focused on becoming profitable as soon as possible.

Don't mention any other ideas that you may have, as this is a huge turn off.

You can find lists of angel investors at the BBAA site, and VCs can be found at the BVCA site.

Key lesson

Look firstly at the needs of investors, and only secondly present your need for money and how exciting the business proposition is.

Top tip

Try to find one or more people to join your board who have credibility to help investors make the decision to invest.

Find out more about Actinic

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