What Is the Best Way to Get Funding? – Top Tips From VCs & Investment Experts

Starting and growing a business is no easy task – having to manage its everyday demands all the while expected to pitch effectively to gain investor interest. But how exactly do you pitch effectively? What are investors looking to see? And ultimately, what is the best way to get funding for your business?

Here, TechRound has collected expert opinions from those in the industry, offering up their advice on the matter…

 

Our Panel of Experts:

 

  • Dr. Fiona Pathiraja – Partner at Crista Galli Ventures
  • Dan Bowyer – Partner at SuperSeed
  • Philip Edmondson-Jones – Principal at Oxx
  • Charlie Spokes – Founder of Hellosolo
  • Gwilym C Pugh – Owner of I’m Insured, Influencer & Investor
  • John Auckland – Crowdfunding Specialist
  • Mary Glazkova – VC PR Partner, Untitled Ventures 
  • Maria Dramalioti Taylor – Founder and Partner of Beacon Capital
  • Angelika Burawska – COO of SFC Capital
  • Amber Jardine – Hive Manager at TwinklHive
  • Myles Milston – CEO of Globacap
  • Sebastian Peck – Managing Director at InMotion Ventures
  • Lucanus Polagnoli – Founder & Managing Partner at Calm/Storm VC
  • Leslie Uzan – Head of Alternative Investments at St. James’s Place Wealth Management
  • Anthony Rose – CEO and founder of SeedLegals

 

Dr. Fiona Pathiraja, Partner at Crista Galli Ventures

 

Crista-Galli-Ventures-partner-Fiona-Pathiraja

 

“Crista Galli Ventures is a healthtech specialist investor, investing at the early  stages, predominantly at seed and series A. We back pan-European founders building the future of healthcare. We invest in three key verticals in healthcare:  Deep Tech in healthcare (AI and Machine Learning), Digital Health and  Personalised Medicine. If your startup is in one of these areas and at the right stage for us, please reach out to me.”

“I’m very happy to be approached on social media and often get founders reaching out on Linkedin or Twitter (where my DMs are open). Additionally, I’m  often speaking on Clubhouse about healthtech in Europe. The advantage of  Clubhouse is that it is an informal and intimate setting so people can hear  investors’ views live.”

“I co-host a weekly healthtech room every Sunday evening at 1830 GMT/ 1930 CET on the Human Behaviour Club (the largest Club on  Clubhouse). This weekly room discusses the past week’s global healthtech trends and this can be useful for founders to drop into. When I’m dipping in and out of other Clubhouse healthtech rooms, I often discuss the verticals in healthcare that I am keen to expand into, what I’m looking for in founders and founding teams.”

“We have relationships with several of the accelerators and incubators in Europe and often get referrals of healthtech startups via Entrepreneur First, SOSV, P4 Precision Medicine Accelerator and KQ Labs. We are also keen to back female  founders and are participating in Playfair Capital’s Female Founder office hours, alongside many other VCs in Europe.”

“The best founders really understand healthcare and know that it is a complex  and regulated environment. Great founders will have a solution that fixes a real clinical problem. They will know how patient and clinician pathways around this problem interact and they will be thinking of how their solution impacts patient outcomes and clinical workflow.”

 

Dan Bowyer, Partner at SuperSeed

 

SuperSeed-partner-Dan-Bowyer

 

“Firstly, show that you know your audience. A generic blanket all email to investors rarely works, so you must tailor your approach to suit. I recently had a great example of this from an American online events company called Balloon. Iraklis the founder sent a glorious teaser opener via email, cold, that was so well positioned I just had to know more.”

“It was short, the value proposition was perfectly laid out in bullets, positioned so clearly as to why they are better, and why they thought we would be a great fit. No deck. No blurb. 5 lines. Asking if we’d like to know more. Of course we would!”

“Many investors will ask for warm referrals, some insist on it, and there is no harm using that approach first where you can. We don’t care. If you’ve done your homework and are thoughtful, a cold email is absolutely perfect.”

“When you do send a deck (1st email is fine if you’re not up for teasing), make it short, visual, to the point – focusing on what you do, who you serve, why you’re better and who you are. A simple PDF is best. There is no need to get cute with flashy graphics. And don’t ask them to sign an NDA either. In the bin.”

“There are a number of platforms such as connectd.co who are doing some of the heavy lifting for startups looking for investment. Keep an eye on the upcoming support platforms like these.”

“And finally, just keep going. All of the no’s are really useful feedback mechanisms, and will help you become investable.”

 

Philip Edmondson-Jones, Principal at Oxx

 

Oxx-principal-Philip-Edmondson-Jones

 

“For better or worse, warm referrals have always been the go-to method for approaching VCs. A friendly introduction from another founder, operator or investor within a VC’s trusted network is a sure-fire way to catch attention.”

“We back B2B SaaS companies at the scale-up stage, so the founders we speak to often have a network to plumb. Creativity can go a long way here because even a less obvious second-degree connection might help you craft your warm intro. Most VC’s aren’t strangers to this approach, we’ve all pored over LinkedIn trying to connect the dots to get that warm introduction to a great founder!”

“But approaching a VC cold absolutely can work. In a remote year this has meant email, social media, online events or elsewhere. We read every pitch email – but to be effective you really have to cut through the noise.”

“There’s a few tactics that will help your email stand out:

  1. Be Relevant – It sounds obvious but approaching a B2B specialist VC about a consumer company just won’t work. We absolutely understand you’re sending out a lot of emails, but it’s a secret pet peeve for every VC.
  2. Be Personalised – A personal touch will go a really long way. Why do you want to partner with this VC? Has the fund recently invested in a relevant business? Have they published an opinion piece that resonates with you? Did you see them on a great panel on Hopin recently?
  3. Be Concise – The quicker you can summarise what you do and why it’s exciting, the quicker a VC will be hooked. By being specific you can also align expectations – are you actively raising, or do you want to nurture a relationship for the future?
  4. Follow Up – Sometimes things just get missed in the bustle. Feel free to gently nudge after about a week.”

 

Charlie Spokes, Founder of Hellosolo

 

Charlie-Spokes-Hellosolo-founder

 

“I’m raising EIS funding at the moment and want angel investors to join me in my mission to change the face of the dating industry for good.”

 

“Hellosolo champions the best dating events and services in the UK on our fab new platform designed to help singles successfully navigate the wonderful world of dating.”

 

“I’m a female founder with 4 years of experience in the dating industry and I’m passionate about making dating fun for singles!”

 

“Speak to people in person where possible or over the phone if not. Cold emails/lLinkedIn messaging can be very difficult to get your idea across with the clarity and passion needed to get people to buy in!”

 

“Be bold – don’t be afraid to pitch to certain people or shy away from an opportunity because you’re nervous.”

 

“Find people who understand your industry/space – it’s much easier all round if they already “get” the market and the problem you’re trying to solve!”

 

Gwilym C Pugh, Business Owner, Influencer & Investor

 

Gwilym-Pugh-Investor

 

“First of all, all funding isn’t equal. Where you get your investment from can benefit your start-up just as much as the money.”

 

“Aside from the obvious friends & family, institutional and crowd funding routes think outside the box and put together a list of complimentary sectors and businesses.”

 

“From there you can contact the business owners themselves and/or look into who has been involved in funding and promoting these businesses. Finding a synergistic partner to invest could just be your golden ticket.”

 

John Auckland, Crowdfunding Specialist

 

John-Auckland-Crowdfunding Specialist

 

“Traditional funding routes like private equity or venture capital are not appropriate for all businesses, and far from the only option. One avenue to consider is equity crowdfunding, which effectively combines a fundraising campaign with a marketing drive.”

“The average raise size has been increasing year on year since crowdfunding was established a decade ago. Despite the uncertain environment of 2020, the average raise on the top platforms, Crowdcube and Seedrs, stood at £620k and £581k respectively, according to Beauhurst. Raises of £1m+ are also common on both platforms.”

“But it’s the opportunity to form and consolidate a dedicated community that’s unique to crowdfunding, and ultimately worth more than the money raised. By allowing your supporters to own a slice of your company, you allow them to buy into your mission and form a vested interest to help secure your future success.”

“I set up TribeFirst five years ago when I realised the world was changing. Customers want deeper relationships with the brands they love, and want to feel involved in the big ideas that progress human advancement. This sentiment has only strengthened with time.”

“Typical campaigns see hundreds of retail investors investing between £10 and £250, showing larger investors that the crowd sees your idea as one worth investing in. As well as the idea you’re pitching, larger investors will then assess aspects like your team, financials and future projections.”

“By investing anywhere from £10,000 to many hundreds of thousands of pounds, the more sophisticated financial backers you will approach in a traditional investment round are still a critical part of a crowdfunding raise. They can transform your campaign and in turn, your business. This is why for many new and growth stage businesses, the opportunity to gain both substantial investment and legions of loyal backers makes equity crowdfunding an opportunity too good to miss.”

Mary Glazkova, VC PR Partner, Untitled Ventures 

 

Mary-Glazkova-VC-PR-Partner

 

“Half of the projects we invest in are referrals, and we find the other half ourselves. We are looking for a proven technology with a proven business model, a strong team with STEM education and a willingness to build a great product. Some entrepreneurial experience is what we say “nice to have”.”

“Once we’re in touch with a team, we start monitoring the dynamics of the development of their project. Usually the period is three months, but sometimes this takes longer. If during the period we see good results and business growth, we make a decision to invest in a startup and join the board.”

 

Maria Dramalioti Taylor, Founder and Partner of Beacon Capital

 

Maria-Dramalioti-Taylor-Beacon Capital-founder

 

“Reach out! Either via an introduction or cold, just do it! Either way, we will answer within a few days if it is of interest.”

“I’m not going to pretend differently, it’s easier to land a first meeting when you’re introduced by a founder in our portfolio, or someone we know, but we take meetings from cold outreach too if they are on thesis. If you don’t have a warm intro, then the next best thing is to send a quick email and explain why you believe you are “on thesis” for Beacon. Fortunately for you, Beacon’s thesis is laser-sharp focused.”

“We invest in enterprise tech at a very specific stage in the life of your company – post-Seed and pre-Series A. We look for initial market validation and a level of product/tech maturity which is beyond what you typically see at Seed stage. We exist because enterprise tech products require a high level of sophistication to be adopted and founders need more capital to reach Series A level of traction.”

“Sending a good initial email with relevant information is key to help us decide. When looking at dealflow, even at that initial email stage, we always have our internal scorecard in mind. That focuses on our 7Ts: team, target, technology, traction, timing, tenability, terms.”

“What makes us different is that we invest at pre-Series A stage but offer the level of support and engagement that is typically offered by Series A investors. If you let us, we will take you on a journey of establishing strong foundations ahead of your scaling.”

 

Angelika Burawska, COO of SFC Capital

 

Angelika-Burawska-SFC-Capital-COO

 

“As seed investors it is our job to look for what is going to be the next big trend in 7-10 years time, not what is currently happening. This means founders need to demonstrate that their idea is a long-term solution to a problem that can’t easily be solved by other means. In the current climate that also includes assessing the impact of Covid on their market, and how it might have changed since they had that original idea.”

“It will also be easier to ensure funding if you look at your business from an investor point of view: what risks they take, what returns they expect and how soon, how much funding the business will need moving forward and what this will mean for you (the business) and for investors. Having this perspective will make the conversation easier. Remember that investors are practical people and all they care about is success of the company which cannot happen without you – the founder.”

“It is also important for investors to see that the founder understands the journey they are about to go on. It will involve long working hours, high levels of stress, and more before they begin to see any real returns on their business. Being able to show to investors that you understand that process, and are willing to take risk on yourself, will go a long way in reassuring them that you are in it for the long haul.”

“Finally, it always pays to share as much as you can. Whether that is early financial information, or conducting several meetings so that the investment team can really get to know you. Treat investors as partners and ensure that there is a level of trust and flexibility to work out the best terms and conditions of the investment. Especially until we get back to being able to have in-person meetings as standard, investors will want that extra reassurance in founders before they part with any money.”

 

Amber Jardine, Hive Manager at TwinklHive

 

Amber-Jardine-Hive-Manager-TwinklHive

 

“One of the best ways to get funding to your business is to apply to accelerator hubs. A key way to get your product or service in front of these investors is through a clear pitch deck.”

“The best pitch decks we receive are clear and relevant to what we offer. They should showcase scalability, a defensible business model and a real-world problem that your product or service solves.”

“Startups trip up when they don’t do their research. It’s clear when applicants haven’t read our criteria and, as a result, don’t understand what types of businesses we invest in. You’ll save more time and have a higher success rate in securing a meeting if you take the time to make fewer applications to places where you’re a good fit.”

“Equally, don’t write something off before you’ve done your research. Most people presume TwinklHive only invests in EdTech startups, but we also invest in other tech sectors including Fintech and Healthtech.”

Myles Milston, CEO of Globacap

 

Myles-Milston-CEO-Globacap

 

“Until recently, companies on a high growth rate had two options to continue to access investment: go public or sell out to private equity or a larger company. And, while there is glitz to a successful IPO, there are also great risks, higher administrative overheads, and shorter-term investor demands, often to the long-term detriment of the business. However, this is no longer the case. Thanks to the rapid development of financial technology, it is now possible to attract capital from large institutional investors by providing them with a route to liquidity without going public.”

“I’d advise businesses to stay private for as long as possible in order to protect their business and allow them to focus on the long term. While there are plenty of headlines about successful IPOs, such as Deliveroo, there are plenty more unsuccessful IPOs that don’t get covered.”

“Also, when a company goes public it is beholden to the whims of the market, shifting focus to the short term, such as the next quarter or six months as opposed to the long-term goals of the company. It also makes companies vulnerable to “pump and dump” tactics similar to what we saw GameStop fall a victim to earlier this year. It’s very difficult to sustain stable growth in the long term if you’re a public company.”

“Ground-breaking platforms such as Globacap’s, facilitate streamlined secondary transactions in private securities with automated settlement, enabling investors to transact in a similar way to public markets but without the company needing to go public. The digital era has moved from making communication and knowledge sharing more efficient, to automating outdated, complex capital markets processes. Any business leaders looking to raise capital should thoroughly explore the new options available to them to stay private.”

 

Sebastian Peck, Managing Director at InMotion Ventures

 

Sebastian-Peck

 

“InMotion Ventures is the corporate venture capital (CVC) arm of Jaguar Land Rover. Because no two corporate VCs are alike, it is critical that founders understand how we work. CVCs generally fall into one of two groups. The first group makes any investment contingent on a collaboration between the startup and the CVC’s parent organisation, which tends to work better for later-stage companies – if you’re pitching as CVC that operates in this way, emphasize the strategic value your innovation could have for the corporate, the projects you could work on together, and how you would capitalise on the opportunities the corporate could open up for you.

“The second group operates more independently, and acts more like a traditional VC with a specialist focus. This tends to work particularly well for early-stage companies who look for support beyond capital during the search for product market fit. The CVC can support this process by granting access to the parent company and wider industry network, and by drawing on its domain expertise to provide an outside perspective to the founder. In both cases it is important to ensure that there is good alignment between what the founder and the corporate-backed investor want to get out of their relationship.”

 

Lucanus Polagnoli, Founder & Managing Partner at Calm/Storm VC

 

Lucanus-Polagnoli-Calm:Storm VC

 

“To convince investors that your start-up is something worth investing in, you first need to define the problem you’re solving. The symptoms of a problem and its root cause are two two different things, so make sure it’s crystal clear what your solution or product is tackling and why. If you’re able to clearly and powerfully articulate this, you’ll be in a strong position to secure buy-in from investors on why your market offering is needed.”

 

“The next thing to do is demonstrate an understanding of the market you’re selling to. Investors will be looking to see how well you know your prospective customer base, their purchasing habits, and the strategy for reaching and converting those prospects. For example, we invest in a lot of healthtech companies. In this sector, those who are benefitting from a solution (often patients) often aren’t those procuring it (more likely to be healthcare managers). It’s not enough to have a good product – being clear on your route to market is also essential.”

 

“Investors will also be extremely interested in you and your team, especially if you’re a very early stage company. With the right people, a good idea can become a great business. Make sure you have a team which brings the right mix of skills and that, crucially, people have clearly delineated roles. Investors will be looking to see if you’ve got the right attributes and experiences to not only make the start-up a success, but that will also engender trust in the markets you’ll be selling to.”

 

Leslie Uzan, Head of Alternative Investments at St. James’s Place Wealth Management

 

Leslie-Uzan

 

“For any founder, having a strong support system is paramount, but crucially having a thought-out blend of peers, mentors and advisers can also play a key part in securing funding. Peers that have already gone through the fundraising process can provide valuable insight and advice on how to approach VCs. Mentors can advise on funding options, explain the fundraising process, help review your business plan and pitchdeck, advise on how much to raise and how much equity to offer. Advisers can then fill any skills gaps within your team.”

“It’s vital to take the time to review and evaluate the best financing options for your business, for example grants, loans or VC funding. Worth noting, however, that on average the value of grants are 20-28 times lower than angel investment. Furthermore, angel investment or more generally VC funding also comes with resources, mentorship, expertise, contacts – in short, you get a lot more than just money. It’s only natural to be cautious and protective over your ideas and your business. However, taking a greater perceived risk and obtaining external funding can pay dividends and truly help accelerate the growth of your business.”

Once you have settled on raising external funding, it’s very important to do your research. Think about where you are in your journey, how much you are looking to raise, and what sector your business is operating in. These factors will influence whether you go down the angel investment or VC route, and also help you identify relevant backers.”

“Now that the groundwork is done and you have your target VCs in mind, you need to get your business in the pipeline. You are far less likely to receive funding if you submit a “cold” application than if you get a “warm” introduction. It is therefore vital to network within the VC industry. A good tip is to have a look at VC industry awards or attend a start-up programme.”

“The last step is to ensure that once you are finally facing the investors, you deliver the best possible performance. Whilst you may know your business like the back of your hand, perfecting a pitch takes practice. There are now many VCs and organisations offering pitch clinics.”

“Finally, be bold and be ambitious. You are in control.”

 

Anthony Rose, CEO and founder of SeedLegals

 

Anthony-Rose-SeedLegals-founder

 

“Over the last year, start-ups and businesses across the UK have felt varying degrees of impact due to the pandemic. Many are under increased pressure, while others are thriving and growing as we adapt the way we live. Both scenarios, however, mean more businesses than ever are seeking investment – to either replace declining revenue or support growth as they navigate an increasingly uncertain economic future.”

“From an investor perspective, this means demand for their time, funds and experience has never been higher.”

“To stand out from the crowd, it’s vital that as an early stage startup looking to fundraise, you tell a version of your company’s story that demonstrates the opportunity for long-term growth, despite the uncertain outlook. This is a chance to showcase your amazing team and leadership, frame your unique product within the market and most importantly, the underlying problem you are solving. It’s also just as important to showcase your non-monetised growth (such as social networks), as well as the more traditional monetised growth.”

“These factors should all help emphasise the potential for long-term success and demonstrate how your business will fare when things do eventually return to ‘normal’. While many businesses have been catapulted into hyper-growth over the past year, investors are still looking for agile businesses who can fare the foreseeably volatile economic landscape.”

“If you’re an early-stage venture, bootstrapping might be the way to get the ball rolling and better position your company ahead of more formal funding rounds down the line. As startups continue their mission for growth during this challenging economic landscape, entrepreneurs have increasingly sought out quick injections of cash to support their businesses through initially volatile times and SeedLegals has seen bootstrapping steadily rise in popularity, with an increase of 26% year on year.”