You’ve got a killer idea, developed the product and asked some business contacts to join you. You know now is the time to grow and take the business to new heights - but how can do you find the right people to back you? It’s Global Entrepreneurship Week, so now’s the time to start your engines. Here’s the stuff we wished we’d known when we were looking for funding.
People are as important as pounds
A VC partnership should be more than dollars or pounds. Don’t underestimate the importance of a cultural and personality fit. Working with people who share the same ethos and approach to business will pay for itself in the long term, over and over again. When looking at VCs, also try and gain an understanding of who they could potentially bring into your business to strengthen the management team and give the organisation some additional intellectual and managerial firepower.
Find an investor who adds value
Identify potential areas of weakness in your business, and find an investor who can fill those gaps. If you don’t have a good head for maths, for example, hunt for an investor who’s a financial expert. Another way for an investor to add value is with their network. The VC might have a portfolio of similar businesses to yours. Alternatively, the VC’s wider network might mean some previously closed doors magically spring open. Get under the skin of who your potential VC knows and how it could help your business.
Find a strong broker
Entrepreneurs often use brokerage firms to manage the process of finding an investor for them. There are plenty of brokers who will act for you without charging retention fees, but it’s also vital that you trust them implicitly. To ensure they represent you to the best of their ability they must have a solid brief and you need to be sure that they have the best interests of your business at heart.
Don’t be afraid to be a tough negotiator
More often than not, entrepreneurs put their life and soul into their business ventures. So you’ll need to be sure that the VC you’re going to work with has a track record of helping businesses grow successfully. But be prepared to stick up for yourself when it comes to personal guarantees and warrants. Investors will be impressed if you stand up for what you want. It’s important to remember that they’ve had to do the same to get where they are.
Go with your instincts and have a shared vision
We often have gut feelings about what is and is not the right decision. Instinct can be the difference between success and failure, so go with it. Make sure you’re comfortable with a VC deal and ensure you have a shared set of ambitions and objectives. Trust is important in any relationship, but never more so than when there’s money involved.
Going into a new VC relationship is time-consuming and it requires the production of a lot of past documentation and information about your business. Unfortunately some entrepreneurs fall into the trap of focusing solely on driving their business forward, without recording things as they do, and end up neglecting their admin. When going through due diligence, it's easier and smoother if you have a place where everything is recorded, otherwise it's hard to remember what happened and when. If you’ve been a bit disorganised up until now, get all your documents in place before going on the hunt for a VC. There’s nothing worse than having to go back to find that piece of paper you left in the car, or a document that’s fallen down the back of the sofa.
- Dominic Joseph and Adam Ludwin are the co-founders of London-based ad tech business Captify.