What happens AFTER you raise finance
Closed the deal? Now you've got to execute the plan you promised your investor. Scottish Equity Partners discuss the first 100 days post-investment
Once you've closed the deal, you'll face a pivotal moment when the adrenaline rush subsides and it is time to execute the ‘100 day plan' agreed with your new investor.
It may sound daunting but with the support of an experienced investor, a well-constructed plan will prove a valuable road-map for the journey ahead.
Building a high-growth company can be exhausting and even lonely at times but having a supportive investor on hand as your business grows and encounters fresh challenges can ease the burden.
This is a benefit that you may not foresee but often becomes apparent when your partnership begins in earnest: particularly if you have a ‘hands-on’ investor.
A fundamental shift takes place when a deal completes as everyone is on the same side of the table, with aligned goals and shared commitment.
For you and your management team, the first 100 days presents a golden opportunity to forge a strong partnership with investors, to harness the goodwill of staff, and to establish firm foundations for growth.
Studies have shown that investors have the greatest opportunity to instigate positive change immediately after a deal closes when the investee company is most receptive to fresh ideas, new processes or new hires that will help the business grow.
Communicating news of the investment can form part of your ‘100 day plan' as it is important to ensure consistent key messages about your company’s future are delivered to all stakeholders – including your customers.
Creating the plan should be a collaborative process arising out of rigorous due diligence.
Investors spend weeks assessing risk and opportunity relating to every aspect of a business – from legal to financial, technical and people issues – so that when a deal completes, everyone is clear about the building blocks that will enable the company to achieve its full potential.
You should identify priorities and entrust management with execution, allocation of responsibilities and reporting to the board on actions. You should welcome this as an opportunity to refocus on the business – it is important for investors to have faith in you and your management team and allow you to get on with the job.
It is important to prioritise issues that might compromise your business' growth, or cause delays or disputes.
Issues will vary depending on your business and can encompass market entry strategies, marketing, branding, patent strategy and intellectual property, accounting standards, IT systems, HR processes, order fulfilment, and contractual terms and conditions.
You may also want to consider a strategy to maximise proceeds on exit: it is important that you consider material decisions on this early and plan accordingly. Investors can advise on options and incentive schemes and tax planning; including eligibility for Entrepreneurs Relief.
Strategic hires should take place in the first 100 days after you raise finance. Joining an early stage business can be regarded as risky but securing a reputable investor can be game-changing to add that extra credibility when hiring top talent.
A well-connected investor can make introductions to executive and non-executive directors and to portfolio companies that have been on the same journey.
Case in point
Scottish Equity Partners (SEP) has worked with numerous management teams to create effective 100 day plans. Our portfolio company SportPursuit, an e-commerce company specialising in flash sales of branded sports and outdoor gear, is an excellent example of a business that has benefited from a well-executed plan.
We led a £9.5m Series C funding round for SportPursuit last November to support the company’s objective of becoming the pan-European leader in premium sports brand clearance, a market worth £10bn.
The company has a highly capable management team led by CEO Adam Pikett who co-founded the business in 2011. SEP worked with the team on a detailed 100 day plan covering issues that underpin international expansion such as refining the country expansion plan, recruitment, intellectual property, international logistics and payments as well as data management.
SportPursuit has made rapid progress and now has more than two million ‘members’ in 40 countries and international sales have risen to 20% of total revenues compared to 5% a year ago.
We introduced them to portfolio companies with experience of European expansion and useful insight on scaling up a workforce, and logistics and payments. These included Mister Spex which has evolved from a leading German eyewear retailer to Europe’s largest independent online eyewear retailer and Babbel, the developer of a market-leading language learning app with worldwide sales.
Networking with companies who have blazed a trail can be really valuable.
We held a HR knowledge sharing session that enabled SportPursuit and other portfolio companies to learn from the experience of travel search engine company Skyscanner, a portfolio company that had fewer than 50 employees when we first invested in 2007 and is now a global business employing almost 800 people.
Don't regard the first 100 days after securing investment as a baptism of fire. With the right investor, it should mark the start of a highly productive partnership.