Investment - What're Your Options?
In this month's blog post, I'm going to explore how you can take your unicorn with a tiny horn and turn it into a majestic (and profitable) steed. When looking at the options, a lot of founders can be daunted by the steps needed to launch themselves into the next phase of growth. So just how does a business go about doing this?
Raising capital for a fledgling business is best looked at in distinctive stages: start-up funding (your own finances often, or from family and friends), seed, early stage/scaling-up and finally growth capital.
To find the right investor to support the next stage of growth you must first define where the business is in this cycle, in terms of the amount you seek or need.
One option are Angels Investors, private individuals with liquid assets from their own successes, who typically invest both money and knowledge into supporting a business they really believe in. As well as the financial benefits of having someone of known success on board, the best Angels will offer business critical, strategic advice as well as arranging valuable introductions via their network to assist with both client building, product adoption and semantics like internal recruitment.
The good news is, the Angel Investor network in the UK is more advanced and streamlined than ever before, and is becoming the typical 'go-to' for entrepreneurs that are looking to inject cash with knowledge into their venture.
Some Angel Investor’s take it one step further in organising 'seed funds' - groups that have a greater pot of money to invest with, whilst offering a board of potential NEDs (Non-Executive Directors) or Advisors. What's more, the UK Government has pushed heavily for larger investments into the SME world. There are now numerous tax incentives for individual Angels, namely the Enterprise Investment Scheme and Seed Enterprise Investment Scheme (SEIS), which allows these investors various tax breaks for backing new ventures and investing their time into worthy business causes.
Another option for a start-up or seed-stage business is an accelerator programme, which we've seen many of within our client base at Ashmore Stark. Virgin Start Up, Level39, and Microsoft Ventures amongst others (these are the most notable within FinTech), all exist to develop start-up or seed scaling businesses, whilst coaching them to the turbulent starting line of 'Series A' funding.
In recent years, the market has seen promising growth from businesses within the sector taking the leap from Seed funding to Series A and beyond - and better yet, the seed-funding habitat is exceptionally strong as we enter into 2018, thanks to the likes of Seedrs, Crowdfunder and Kickstarter, which allow anyone with some movable finances to invest in the latest business ideas and ventures in return for the golden ticket that is equity.
In summary - it's never a smooth road to a successful business and an eventual IPO. The real key is research: identify the exact stage your business is at, network with the right people and ultimately do what's best for continual and sustainable growth, not short-term winnings.
And when you need some rock stars to join your growing company get in touch, we’d love to be on the journey with you.