Another excellent evening at our most recent Smart Cookies event. “Inside Investment: What they don’t tell you about raising money”. Hosted by our MD Harry, we explored misconceptions of fundraising, how to find the right investor and how they can be like sheep.
Some of the key takeaways from the evening were that fundraising is far from a swift and simple process that takes time, paying customers and resilience!
Meet the expert panel
Briony Phillips – A connector, facilitator, and problem-solver. After seven years supporting the startup and scaleup community in Bristol and Bath, she is now consulting across a variety of projects. She has been working to increase the flow of equity funding into companies in the region since 2017 and is a scout for Ada Ventures. One example of her work is the www.techforgoodbb.com map which she created with Rocketmakers to raise awareness of the Tech for Good business community locally.
Dr Henry Crosby PhD – Co-founder and CEO of Martello, a database for conveyancing search providers. Martello has been trading for 4 years, raised £2.3m, and is growing its revenue by 2.8x month-on-month. Henry also began a small angel network in the southwest of England to support local entrepreneurs. Henry began his career as a data scientist building platforms such as NimbusMaps, and Carterwood Analytics. Henry also has a Ph.D. from the Warwick Institute of Sustainable Cities, before becoming a research fellow for Global Sustainable Development also at the University of Warwick.
Amy Newton – An entrepreneurial CFO dedicated to inclusively supporting businesses. With over 20 years of experience raising capital from angels, VCs, and PEs, Amy has made significant contributions to the business world. They founded a successful sports retail chain and is currently the Founder of Newtons Theory and Inclusive Angels.
Jon Bonnick – Co-Founder of Angel Investors Bristol, has a rich background as a software developer and consultant for Microsoft UK. With a focus on using software to create competitive advantages, Jon makes angel investments in the UK and USA. Jon is committed to supporting local business growth through AIB’s network of angel investors.
Image credit: Ingrid Morgan, Rin Hamburgh & Co
Insights
- Investment takes time
- Investors are like sheep
- Being turned down by an investor doesn’t mean your business is not investable
- Prove to investors with paying customers
- “Ask for advice, you get money. Ask for money, you get advice”
- Finding the right fit is important
Key Takeaways from the panel discussion
Investment takes time
When seeking investment for your business, it’s important to understand that the process is often much longer and more complex than it might seem. Many entrepreneurs mistakenly believe that funding is readily available and that angel investors are just waiting to distribute their cash. Briony explained that, “in reality, it’s a kind of six to 12 month run way of hunting down the right investors who are the right back to your business and making sure that you’re lining up all the various things that need to line up in that process”. Additionally, it’s crucial not to compare yourself to successful founders who appear to have effortlessly achieved their goals. Amy explained “the exited founder looks like the photo of the exited founder. They look like that in one photo but they’ve come through a long journey to get there” . Embrace your own path with patience and authenticity, keeping in mind that the outward appearance of success is the result of a considerable process.
Investors are like sheep
You will hear “no” a lot during your investment search, it might feel like the no’s keep coming. But, once you hear “yes”, it’s very likely that you will suddenly have a surge of enthusiasm from other investors. Henry shared that he had 350 no’s in a period of six months but then secured seven positive responses in the space of 2 weeks! “So 350 no’s over six months, seven in the space of two weeks. And that’s because I got one yes. And then I told everyone else that I got that yes, and then they came back and changed their mind”.
Being turned down by an investor doesn’t mean your business is not investable
Sometimes it’s not the right time, sometimes you’re not the right fit. Jon Bonnick explained that, within his group, a rejection often means the business isn’t the right match, not that the business lacks merit. “It’s not a reflection on your business. If we say no, it’s about finding the right fit and match, both on the investor side and the starter side.”
Prove to investors with paying customers
Jon Bonnick and Amy Newton highlighted that having paying customers is a significant indicator of a viable business. Jon Bonnick added that, among his group’s diverse preferences, paying customers are the most compelling proof of traction. While a promising idea and market research are useful, they pale in comparison to having a product that customers are actually paying for. Henry added to this saying that he really gained momentum when they had paying customers, although he did say getting your valuation right is also a big consideration as if its too low, it can be a turn off for investors.
“Ask for advice, you get money. Ask for money, you get advice”
Henry explained the importance of market research and really getting to know what the problem is for your market in order to solve the problem. Henry referenced Rob Fitzpatricks “Mom test” whereby if you ask your mum for an opinion on your business, she is always going to love it, because she is your mum. So you really need to get advice on your product, and go deeper into the need for your product. In doing this work, and asking for advice, it often then leads to a better product and in turn, money.
Finding the right fit is important
Some top tips for finding the right fit:
- Amy recommends seeking out other founders who have successfully raised and scaled in your sector, as they can guide you to the right investors.
- Henry explains the need to find investors who are genuinely excited and passionate about your business.
- Briony says that it’s crucial to understand an investor’s criteria, including their sector, stage, and geographic focus.
- Jon says figure out if people want your product first. Stay humble, start small.
As we wrap up another insightful Smart Cookies event, it’s clear fundraising is more than just securing money, it’s about patience, perseverance, and finding the right investors who share your vision.
A huge thank you to our panelists; Briony Phillips, Dr. Henry Crosby, Amy Newton, and Jon Bonnick for sharing their invaluable experiences and advice.
Additional resources
How brands evolve – https://www.rin-hamburgh.co.uk/downloads/#branding (specifically page 9)
Early stage funding for startups – https://www.rocketmakers.com/blog/early-stage-funding-for-startups-in-the-south-west
Investor Activator Program report 2022 –https://techspark.co/iapreport2022/#Download (specifically page 12)
Open VC list – https://openvc.app/blog/vc-list
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