INSIGHTS / News

On 2 July 2021, SETsquared alongside Tech Swindon, led an engaging panel discussion about the different types of investment and funding available for growing companies, how to access them and how to adopt an innovative approach to become more investible.

 

 

Packed with invaluable content for anyone raising investment, here’s some of the key questions that were asked.

So, I think I have a unique idea – how do I research the market?

Start with the customer and look from the inside out. Small one to one conversations with real or prospective customers will help you gain a clear understanding of what the market looks like. While you absolutely need to be talking to your customers and understand their problems, you want to avoid spending your whole time chasing after specific customer requirements without having your own picture of what strategic direction to take as a business. Do your research to get a wide shot of the market, on an industry scale or an international scale to show that there is really a market for this and understand the scale of the market that you can capture with your innovation.

What steps should I take to prepare for investment?

It is all in the preparation – It often takes at least a year to find investment. If you don’t already know the investment market, or who to talk to, and you haven’t prepared your finances and your pitch deck you’re not ready. You need to slice and dice the investment landscape, so that you’re talking to the right people in your sector, and who are investing at the right level for you. You need many versions of your pitch deck for different types of conversations, a live pitch deck will be different to an email or an online presentation. You need to map out the problem – solution – product – market fit – to go and meet an investor or launch your campaign. Do your groundwork internally, prepare your team, launch yourself on LinkedIn, launch your website, have a page on your website that says you’re raising investment, and you’re selling yourself as a company.  That is when you’re ready to go out and talk to investors.

At the very early stage of innovation, it’s a hard place to be and not to be underestimated. You’ve got to be very sure that you believe in what you’re doing.

Do you have any pitch tips and advice?

When you’re building your pitch deck and your message in your branding, and you’ve decided who your market is, go and start talking to them, teasing them, testing, because you can start building a community even without a product. So then when you do get in front of your investor, you can say, we know our demographic and we’re engaging with them. There is help available, here at Tech Spark or SETsquared, we’ve heard many pitches and we are here to help – the more you bounce it off people, the better it feels.

Today’s investors expect a high-quality deck, there are lots of good quality online templates. I would really urge you to professionalise the look and feel, it’s not just about the story to tell, it’s about how you presented yourself and your materials, and you need to stand out.

Would you recommend raising funds as soon as you can, or once you’ve taken your business as far as you can without investment?

Absolutely the latter, go as far as you can before you raise investment because you’re building your value and you’re doing market validation. Don’t take any investment unless you absolutely must, never give equity away unless you absolutely must. Try and bootstrap as much as you can, and then think about other forms of financing like grants and have a finance strategy.

Can I apply for a grant if I have an idea, but don’t have a team to implement it?

Funders like Innovate UK for example are exactly like investors, if they don’t believe you can deliver, they won’t give you the grant. Alongside your grant application, they will check your project finances, and look for delivery risk within the team. It’s risky investing in innovation, they understand the risk, but it’s up to you to find ways to mitigate the risk and clearly show your method all the way through. It’s better not to go it alone if you can avoid it, I have had experience of working with companies who have started with one person with a great idea and raised significant amounts of grant funding and looking at late-stage seed investment as well. It’s doable, but tough.

It’s important to be honest about your weaknesses, you can’t do everything yourself so surround yourself with people who can.

How do I source experts in R&D without financing initially?

Before you’ve got funds it’s good to talk to academics: they’ve got expertise, resources, core funding, and equipment. They’re desperate to find real world applications for the research that they’re doing. Innovation vouchers with universities can help with access to expertise and validation for free. Another thing to consider is an independent consultancy, they can help you find out where the money is to support you and sometimes, they’ll handle it for you in return for equity or a share of future sales. There’s always interns and placement students for help with a research project, find somebody working in the same field – it could be valuable to them as well as to you.

Why can’t I just do a Crowdfunder?

Crowdfunding can be amazing for the right type of company. Kickstarter are product-related and involve a pre-sale, asking people to buy a product before you’ve made it. Equity crowdfunding platforms such as, Seedrs, work well for B2C products and services, tangible things people can understand quickly. Crowdfunding for deep tech doesn’t work as well. Look at the platforms like Indiegogo and Kickstarter and see whether you fit the profile of the types of companies that are on there. It’s also important to remember that it is a campaign, and needs a six-month run up before launch on many of these platforms etc.

The panel was made up of:

• Lucy Paine, Swindon Ecosystem Connector, Tech Swindon
• Alan Roan & Amanda Coleman of Salisbury-based Cervus Defence and Security
• Rosie Bennett, SETsquared’s Investment Manager
• Chris Pett, SETsquared’s Scale-Up Programme’s Digital Innovation Sector Lead

If raising investment or accessing grant funding is on your businesses agenda, then this is an essential watch. You’ll get lots of hints and tips which you can adopt for your business and hear directly from Cervus Defence about their company growth, funding journey and approach to innovation.

Businesses based in Swindon and Wiltshire can access further fully-funded support via the following options:

Early-stage, start-up businesses can join our Entrepreneurs Workout:
Find out more about the Entrepreneurs Workout

 

Established businesses can join our Innovation Workout:
Find out more about the Innovation Workout