If you’re reading this, then raising capital is already on your mind. And, as you may have guessed, this won’t be a casual stroll through the park. The individuals you’re seeking for investment will want to glean the true nature of the opportunity. To confirm you’re worth their time and money, they will ask you some hard questions. So here are the top investor questions that RJF Accounting advise that you prepare for!
Brush up on a few of the main hooks for investment approval and you could catapult your venture to things it has always hoped to do. Look below to learn about the subjects up for debate…
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How Will You Use the Funds?
Raising capital is all well and good, but where’s the money going to go? Whether it’s for expanded premises, a wider public profile, better production facilities, or anything else that may benefit your revenue, investors will want to know about the endgame. Forecasts are the most useful way of explaining your strategy. Divide your objectives into achievable monthly goals and outline how you will work successfully to these, backed by data and research.
What Is the Market Opportunity?
There are two general market definitions: the emerging, niche sort, and a large market that already has a voracious level of demand. So which are you targeting? And how big is your share of the market in question? Credibly cornering 7% of a nationwide sector, for example, helps investors work out their returns over the business’ potential lifespan. On the other hand, taking 100% of a completely unique market could net them more money – but only if you have solid evidence to prove it.
Who Are You Competing Against?
Every business starts up with competitors in their sights. Crucially though, the local or national sector may have shifted dramatically in the years since you entered it. Who is the biggest threat? What are they doing that you are not doing, and vice versa? Emergent technologies, processes and management styles may be spurring customer preference one way or another.
How Can Traction Be Accelerated?
Your existing profit model should be strong enough to instil confidence in potential investors. Yet they’ll want to see the full story. High sales, enquiries, partnerships and web traffic might have been the result of early success (or luck), which has since dialled down. Raising capital? Show consistency in your traction – how it has performed over time, and what you’re doing to earn more, faster.
What Is the Hierarchy Within the Company?
You’ll rely on certain people to manage sales, marketing, HR and financial administration. To give investors confidence in your capabilities, explain who they are, how they add value, and how you intend to reinforce this model as you grow through further hires.
When Will the Investor Achieve a Return and Liquidity?
Crucially, securing an investor boils down to this – how will they make their money back? Furthermore, when will they start to profit? Liquidity timelines are essential to get the result you want. Of course, the majority of venture capitalists like to stick with a company for many years. But equally, they won’t be keen to wait half a decade for a return on their cash. Exit plans are also useful, because they give investors confidence that – should the business be sold – they will be paid what they’re due.
Answer these questions well, with empirical arguments rooted in the context of your industry, and you’re on track to get funding. But if you feel unable to answer any of the questions above or are struggling to attract investment, it may be time to bring a financial and business advisor into play…
Here at RJF Accounting we do exactly that. We help you to secure the funding you need to launch or expand your start-up business! Talk to us today and see how we can further help you by calling the team on 0161 5040629 or drop us an email at hello@rjf.uk.com – we are open Monday to Friday, 9 am – 5 pm!