Investor Readiness
In order to be successful in attracting equity finance, a company must demonstrate a clear articulation of its business strategy. At each point an investment proposal will be assessed on the basis of the key criteria outlined below.
Commercial Vision
- Defined in customer terms: clear, compelling reason for customers to buy
- Defined in economic terms: sound reasoning supporting sustainable profit margin and high exit value for the business.
Both of these are essential at all levels of fundraising, although a higher level of uncertainty is accepted at the earlier stages.
Management Capability
- Strategic leadership: the leadership team needs to be appropriately experienced and skilled for the next stage of growth
- Financial control: less critical in early phase, essential in subsequent stages
- Sales capability: technical enthusiasm may be effective early on, but in later stages formal sales management techniques will be necessary
- Operational skills: increasing levels of experience at a senior level are normally necessary to secure investment at the later stages.
Technology or Product Maturity
- Proof of concept may be sufficient at seed funding stage
- Working demonstration of the technology is key to post-seed funding
- Production-ready technology required for later stage funding.
Route to Market
- Indicative understanding acceptable at seed funding stage
- Validated route-to-market plan required for first round of venture capital
- Established channel partnerships and customer revenues a prerequisite for later stage venture capital.
Financial Forecasts
- The amount presently sought and a breakdown of the uses the funds will be put to. Monthly Cash Flow Forecasts for first year, quarterly beyond that. Indicative costs for key projects and/or production of goods for sale
- Timing and size of likely further investment rounds before exit. Total financing need and timeline before profitability is achieved
- Coherence of finance figures with market size estimates and rest of business strategy.