Are You Set Up for Success or Failure Before You Pitch for Equity Investment in Your Business?

Pitching for investment is a crucial milestone in the journey of many businesses seeking to grow and expand. Whether you’re a startup looking to scale or a more established company seeking additional funds, your approach to equity investment can significantly impact your chances of success.

So, to increase your chances of success, what should you consider and understand before you pitch for equity investment? Read on to find out.

What is Equity Investment?

Equity investment involves selling a portion of your business to external investors in exchange for capital. Unlike loans, equity funding doesn’t require repayment with interest. Instead, investors become shareholders and share in the company’s profits and losses.

What you need to understand before you go down the equity fundraising route?

There are several things to consider before you embark on an equity fundraising round. Before you create your pitch deck and before you reach out to investors. If you don’t consider these things before you start you could find that you are setting yourself up for failure and not success.

It might be that equity funding is not right for your business or its the wrong time, too early perhaps.  If that’s the case you should consider other ways of raising capital in the business e.g., grants or debt finance.

Answer these questions before you enter pitch for equity investment

Ask yourself these seven questions to find out if equity investment is right for you or if your business is ready for this fundraising.

Q1. Timeframe – have you considered how long the process can take? Often 6-9 months + before money into business.

Q2. Have you got a compelling story?

Q3. What is your investment strategy and what is the money for?

Q4. Have you got time as a founder or senior management team to allocate to the funding round?

Q5. Have you got someone who can do the finances/scenario modelling. This is key to any raise.

Q6. Do you know what type of investor you want to invest in your business?

Q7. Do you understand the process and what you need to do to raise equity finance?

Have you got a credible answer to these questions?

There are many more questions to ask yourself, but Philip Briscoe, our Consultant Commercial Director suggests these are the most important ones before you start down the investment path. He’s on hand to help you with your investment strategy and execution plan and guide you through the process.

What information do you need about your business before you embark on the equity fundraising route?

• Business Valuation: You must understand how your business is valued and what factors influence that valuation, such as market trends, growth potential, and competitive landscape.
• Ownership and Control: When you raise equity, you’re diluting your ownership in the company. Consider how much control you’re willing to give up and how that might impact your decision-making as the founder.
• Exit Strategy: Investors will want to know how and when they can expect a return on their investment. Develop a clear exit strategy, whether through acquisition, IPO, or other means.

Ready for success?

As you can see there is a lot to consider, understand and know about your business before you enter an equity funding round.

Adequate preparation, financial reports, and selecting the right type of equity funding can significantly impact your success.

Give your business the advantage and talk to Tracy Smart. The Smart Team can provide the financial modelling and valuation along with creating your investment strategy and execution plan including creating tools such as your pitch deck from Philip Briscoe. You’ll be better equipped to navigate the equity fundraising route and set your business up for success.