A lot of hard work lies behind landing an investor.
Today, large sums of venture capital are chasing a limited number of business opportunities. How do you persuade a new investor that you have an attractive proposition? Here are five items to include on your checklist:
Make sure your growth plan focuses on areas where there is demonstrable demand in the marketplace, and that you have you researched it thoroughly.
There is little point in reproducing products already in ample supply.
You must be able to produce realistic figures for projected sales, gross margins, profits and working capital, and be able to explain what assumptions have been built into those forecasts. Investors will also want to know how much of the new capital needed is coming from the management team's own pockets. They tend to see this as real proof of commitment.
As well as having a realistic growth plan, you should demonstrate that it forms part of a clear overall strategy. Vision may be an overworked word in management textbooks but it is important to be able to lift your eyes above the immediate day-to-day battle and take a strategic view of the future. Have you thought through the downside, and are you equipped to deal with the crises that are bound to crop up in any growing business?
Your management team should be balanced, professional and have strong experience in the area in which you want to operate. Investors also look for entrepreneurial drive and determination to seize opportunities.
Each member of the team should have a strong track record. If there are gaps in the team, the investor will wish to see them filled before providing the capital because, as most would say, they back people rather than plans. They find that people are the key to earning profits and creating value.
Jo Taylor is a director of venture capital providers 3i, 0171 928 3131.