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Tips for Raising Capital from Hazel Moore OBE

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by Startacus Admin

Tips for Successfully Raising Capital

is an investment bank specialising in advising high growth tech companies on M&A, private equity and growth capital. In this article Co-founder & Chairman, Hazel Moore OBE provides some tips on how to run a fundraising process to improve your chances of successfully raising funding.

Raising funding from investors can be challenging and time consuming. You are likely to get rejected more than once. Strangers will question your products, your markets, your financials, even your competence. You will rail against “stupid” questions from investors who “didn’t get it”. You will repeat yourself many times to many different people so that you forget what you have said – was it this meeting or was it the last one? You may find yourself spending so much time in meetings and answering follow up questions that you don’t have time to attend to the day to day running of your business.

If successful, however, you gain the resources to help accelerate your growth, and (hopefully) a strong supportive partner who will help you achieve your ambitions.

Know your customer

There are lots of investors out there, so who to approach? As with any sales process you need to understand your customer – what are they looking for, what is their budget and how do they make decisions? Researching the investors and selecting your targets carefully will save you a lot of time. Well qualified investors who have expertise in your space (what else have they invested in), money to invest (how old is the fund), and a track record of doing the type of deal you are looking for (size, stage, geography), will understand the opportunity and be able to make an informed decision in a timely manner. Everyone else probably has different criteria or you’d need to spend too much time educating them to get them over the line in a timely way.

Tips for Successfully Raising Capital

Once you’ve selected your shortlist, look for a way in. Investors generally treat unsolicited business plans from people they don’t know as junk mail. Do whatever you can to get an introduction, for example, through lawyers or corporate finance advisers, portfolio companies, or by assiduous networking. The chances of getting through screening processes with a cold call are small. 

Learning from rejection

Investors reject many more deals than they invest in, so don’t take rejection personally. Follow up and ask for the reasons behind a decision, without being aggressive or defensive. Review feedback and if the same issues keep coming up think about how to address them, whether it requires a change in your plans, or in how the opportunity is presented. 

Be “hot”, not “shopped”

Generating a buzz around yourself and your company creates an aura of being “hot”. Investors are very competitive and everyone wants to secure a “hot” deal. This works to your advantage as competition makes it more likely that you will be able to secure better terms.

The ideal is a well-managed and competitive process which generates momentum. A long process will not only sap your resources and energy, but will also reduce your attractiveness because no investor wants to feel that he or she is the last to see a deal that everyone else has turned down. 

Tips for Successfully Raising Capital

Assemble the right team

Keeping the business moving forward throughout the fundraising process is critical. Doing what you say you will do is a key due diligence indicator. Don’t make optimistic assumptions about sales you will close during the fundraising process, because missed deadlines or delayed sales will cause investors to question all the assumptions and forecasts in your plans. This could put them off, or reduce the price they will pay. Being able to negotiate a good deal also requires a credible plan B. Don’t leave starting a fundraising process too late, only to find yourself running out of money with no place to go.  

Fund raising is very time-consuming and you need to commit considerable resource and effort. It may be worth considering getting additional help or support. The right team of experienced advisers can make a considerable difference to the outcome, in terms of time, the chances of success and the value and terms of the deal.

About Hazel Moore OBE

Hazel is chairman of FirstCapital, an investment bank with offices in London and Silicon Valley specialising in providing M&A and private equity advice to high growth EuropeanHazel Moore OBE technology companies.

Hazel is a member of the Governing Board of Innovate UK, the national innovation agency for the UK. She was previously on the Investment Advisory Panel of the North West Fund, and ran a portfolio of venture capital assets for a European family office.

Hazel received an OBE in 2016 in the Queen’s New Year’s Honours List. She received the OBE for services to entrepreneurship and innovation.

If you are interested in raising capital, you may also want to read this handy tips article on successsfully raising capital from Cally Russell, founder and CEO of Mallzee, the UK’s largest multi-retailer fashion shopping app, on Mallzee has to date, raised £3.1 million from a series of investors.

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Published on: 19th July 2017

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