The A-Z of Funding Your Startup in 26 Words

You’ve set up a fledgling of a business, found enough support to get you over the first hurdles and you’re ready to progress to the next stage. You’re considering raising money on an online investment platform. Great – now what? With the rate the sector’s evolved over the past few years, where do you even start?

Here are 26 words to get you thinking.

A – Audience

Know your audience. Most people won’t be specialists in your market or product, so don’t treat them as if they are.

B – Business plan

Generally, investors want to know what you have in mind for the next year in detail. Focus on what you know is closest to achievable, and ‘real.’

C – Competitors

Don’t just talk about ‘the status quo.’ Do your research and find out about other startups in your space – and be careful about saying there aren’t any! Articulate your edge.

D – Due diligence

Investors often want to know who has done what due diligence. Being able to point to respected law firms, accountants, business angels etc already working with you (or better still, investing) is great.

E – Engagement

Answer questions as quickly and as comprehensively as you can.

F – Financials

Any historical data you can share is vital. Forecasts are useful, but don’t get too bogged down with these – most investors know they’re just guesstimates. Nevertheless, think carefully about the assumptions underlying your figures.

G – Good, solid product or service

Obvious point, but make sure you have a USP. If you haven’t done your market research to prove there’s interest, you need to, and you need to demonstrate it.

H – HMRC

Know your stuff when it comes to tax breaks for investors. In the UK, most investors are heavily incentivized by the (S)EIS schemes. There’s lots of advice on HMRC’s website.

I – Industry context

Know the industry you operate in. How big is it? Is it growing? Maybe it isn’t – and that’s ok, as long as you have a demonstrable place in it.

J – Jobs

How many people are you going to need to grow this thing? Be realistic. Early-stage businesses typically raise cash to hire more staff. Prove you know exactly who you need and where you’re going to find them.

K – Know your place

Are you building a new piece of the market or taking a piece of the market from someone else?

L – Lead investor

Not all platforms require one, but some do, so look out for that. What these platforms are looking to see is active, arm’s-length investment in your business to legitimize the round.

M – Marketing plan

How are you reaching your clients? ‘Social media’ is a tool, not a strategy. Don’t be vague, and think about momentum when it comes to marketing the campaign itself.

N – Nominee structure

Know what each type of nominee structure means for you (and your investors).

O – Online

When raising money online, having a video is really key for investors to have a sense of getting to know you. Meetups are great too, if you get the chance.

P – Platform

Pick your platform appropriately. Look past the marketing speak and do your research on the companies they’ve funded and look for parallels with what you’re offering.

Q – Quality

It’s an obvious point, but if you don’t check for the superficial signs of quality (nice images, good spelling, passable grammar), it’s off-putting for investors.

R – Revenue

You don’t need to be in revenue. If you are, shout about it; if you’re not, be comfortable with this, but be aware of when it will come.

S – Sales

Always be clear on the status of any sales conversations. Of course, a contract is ideal, but any written or verbal interest is also worth mentioning!

T – Team

Why should an investor believe YOU have the team to achieve this?

U – Undercapitalization

Investors expect you to know precisely how much you need. Don’t raise anything else (more, or less).

V – Valuation

Get this sense-checked. Some platforms insist on your having secured investment at a particular valuation before they’ll look more closely at your funding round.

W – Work

Be prepared to put in a little time. Raising on an online platform is efficient, but that doesn’t mean it’s effortless.

X – eXit

(Bit of a cheat, sorry.) Investors want to know that you care about exiting, so provide at least one or two industry precedents. You certainly don’t need to have planned your IPO, though.

Y – Yardsticks

Be careful about making promises; investors can, and will, hold you to them. This isn’t an excuse to be vague, but it’s better to provide a handful of ‘yardstick’ indications of where you want to get to in X years’ time. Ask yourself, how will you know when you’ve made the business you want?

Z – Zero

Don’t give up if it doesn’t work the first time and you get ‘zero’ cash. An unsuccessful fundraising campaign is a great opportunity for feedback for the future. Listen hard, and try again.