Tech City Life: Raising finance – it’s not all about the money
In his latest blog for Startups, Flubit co-founder Bertie Stephens explains the true value of investors and what start-ups should look for when it comes to securing investment…
One of the most important points in a start-up’s lifecycle is raising investment, and it’s something I’m often asked about.
In our own investment journey, myself and co-founder Adel Louertatani realised quite early on that it was high net worth individuals or angel investors, rather than, venture capitalists (VCs), that we wanted to invest in our company.
The value of investors
You see aside from the money, a somewhat essential requirement, when you bring the right kind of people on board in your business what you gain is arguably more valuable than simply the funds. Sure, money is the key ingredient to building, expanding and reaching new goals, but it’s the solid business acumen, experience, and willingness to advise that will really help you get there
Although, as I’ve mentioned before, Flubit has sometimes taken the wrong turn (like almost every other business), I strongly believe in the benefit of learning quickly from others instead of bumbling along wasting time, money, and effort if something is not working. Having a wealth of experience and knowledge at your disposal is so advantageous in getting to your goals.
Our investors come from a variety of backgrounds and industry sectors but they all have a wealth of business experience, have all built successful companies in their own right, and all have expertise that can directly benefit Flubit. They also have a plethora of high level contacts which we can tap into and which we’ve already benefitted from with regards to potential new partners.
Wealthy individuals can typically make decisions more quickly and don’t need to go through lengthy and sometimes painstaking due diligence processes in order to progress things and invest. They also prefer to keep it relatively simple with regards to terms which saves a lot of time and legal costs.
“Dating” your investor
It could be said that raising investment capital is comparable to dating; it’s not necessarily down to your business plan and agreed investment amount that’ll deliver a closed deal. More often than not, it’s how well you get along with the investor and how much you truly value what they can bring to the table alongside the funds. You have to find someone with goals and ideas that are in line with yours and more importantly, you need to establish a very strong level of trust to go into business with someone.
Over the last 18 months I’ve had literally hundreds of telephone conversations and meetings with potential investors. I’ve flown back and forth to the States, sometimes at incredibly short notice, to attend meetings. Sometimes they work out and sometimes they don’t but it’s always worth following up every contact.
Pitching your business
Going into investor meetings can be a real baptism of fire but you learn pretty quickly how to pitch and how to answer questions effectively. As a company we’ve always been very focused on metrics and KPIs and whilst having some impressive headline numbers is obviously important, it’s also about taking people on a journey, telling a story and showing investors that we have a clear plan and vision.
We’ve been in the fortunate position that we’ve been able to be picky; selecting those we feel are right for the future of Flubit. This has already proved to be greatly beneficial when facing situations you haven’t experienced before or looking for introductions to contacts.
The conversations never end however and we are always speaking to new investors and speaking with our existing backers to ensure we have the capital and funding to allow us to realise our potential.
We closed part of our latest investment round at the end of July this year and have been fortunate enough to have attracted business people who are both investing and joining the Flubit advisory board. As expected it’s their expertise and advice, not just their funding, that has proved to be worth its weight in gold.
Bertie Stephens is chief executive of demand-driven marketplace Flubit.com.