How to Find Investors For Your Startup
Attracting investors is crucial for startups and growing businesses in the UK. The right investors can provide not only funds but also industry connections, expertise, and mentorship. However, navigating the investment landscape can be challenging. Here's a step-by-step guide on how to find and appeal to potential investors in the UK.
1. Self-assessment & Preparation
Before seeking investors, make sure your business is investment-ready.
Pitch: Draft a pitch deck highlighting your domain expertise, product, strategy, team, and unique selling proposition.
Valuation: Have a clear understanding of your company's worth to negotiate potential equity distribution.
Legalities: Ensure that all business operations, patents, and partnerships are legally sound.
2. Network Extensively
Networking Events: Attend industry-related events, conferences, and seminars in your niche. Sites like Eventbrite or Meetup often list relevant events.
Alumni Networks: Many universities have alumni associations that organize networking events and can connect you with potential investors.
Online Networks: Platforms like LinkedIn can be vital. Engage with industry groups, participate in discussions, and directly approach potential investors.
3. Explore Funding Platforms
Crowdfunding Platforms: Websites like Kickstarter or Indiegogo can help validate your business idea and attract smaller investors.
Equity Crowdfunding: Platforms like Seedrs or Crowdcube allow you to offer shares of your company to the public.
Peer-to-peer Lending: Websites like Funding Circle offer business loans funded by individual investors.
4. Consider Angel Investors and Venture Capitalists
Angel Investors: These are affluent individuals who provide capital in exchange for convertible debt or ownership equity. The UK Business Angels Association (UKBAA) can be a good starting point.
Venture Capitalists: VC firms manage pooled funds from many investors to invest in startups and small businesses. The British Venture Capital Association (BVCA) offers resources and connections in this space.
5. Engage with Accelerators and Incubators
Startup accelerators like Techstars or Seedcamp offer mentorship, office space, and initial funding in exchange for equity in the startup. They often culminate in a 'demo day' where startups pitch to a room full of investors.
6. Government Schemes and Grants
The UK government offers various schemes to support startups and SMEs:
Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) encourage investments in small businesses by offering tax reliefs to individual investors.
Innovate UK, a public body, provides grants and funding to businesses focusing on innovative projects.
7. Pitch Effectively
Once you identify potential investors:
Personalize Your Pitch: Understand the investor's interests and tailor your pitch accordingly.
Practice: Refine your pitch, ensuring clarity and confidence.
Follow Up: After your pitch, keep potential investors in the loop with regular updates on your progress.
8. Seek Professional Advice
Consult with financial advisors, legal professionals, and industry mentors. Their insights can prove invaluable in attracting the right kind of investment and ensuring the process is smooth.
9. Cold and Warm Outreach to Find Investors
Reaching out to potential investors can be categorized as either cold or warm outreach. Both methods have their merits and can be effective when executed correctly.
This involves reaching out to potential investors with whom you have no prior relationship.
Research: Identify suitable investors who have an interest in your industry or have previously invested in similar ventures. Platforms like Crunchbase, AngelList, or PitchBook can be handy.
Craft a Compelling Email: Your initial email should be concise, relevant, and articulate your value proposition effectively. Ensure the subject line grabs attention.
Follow Up: If there's no response, consider a gentle follow-up. However, don’t become a nuisance; be respectful of their time.
Diversify Your Outreach: Don’t put all your hopes in one investor. Send out multiple cold emails, and remember, it's often a numbers game.
Warm outreach involves leveraging your existing networks to get introduced to potential investors.
Utilize Your Network: Talk to colleagues, mentors, friends, or family who might know potential investors. Personal introductions can be gold.
Engage in Networking Events: As you meet more people in the industry, your circle expands, and you increase your chances of a warm introduction.
Leverage Online Platforms: If you have mutual connections with potential investors on platforms like LinkedIn, ask for an introduction.
Build Relationships Over Time: Warm outreach is not always about immediate results. Engaging with potential investors on social media, commenting on their posts, or sharing their content can build a relationship over time, leading to potential investment opportunities later on.
Tips for Both Cold and Warm Outreach:
Personalize Your Messages: Always tailor your outreach to the individual. Avoid generic, mass-produced messages.
Show Genuine Interest: Display knowledge about the investor's past investments and show how your business aligns with their interests.
Be Transparent: Honesty in communication can set the foundation for a trustworthy business relationship.
Offer Value: Instead of just asking for funds, explain clearly how the investor can benefit from partnering with your business.
10. Timing and Building Early Relationships with Investors
One of the most underrated elements of fundraising is the timing. While the actual act of asking for investment is crucial, the preliminary relationship-building that should occur well before can be equally, if not more, vital.
Building relationships with potential investors long before you need the capital is a strategy that can pay off immensely. Here’s why:
Trust Takes Time: Just as in any relationship, trust between founders and investors doesn't form overnight. Engaging early allows for a gradual, authentic rapport to develop.
Demonstrate Progress: When you engage with potential investors early on, they get a front-row seat to your business's growth, resilience, and adaptability. They can see firsthand how you handle challenges and pivot when necessary.
Receiving Feedback: Early interactions can provide invaluable feedback. An investor's perspective can help you refine your business model or identify potential pitfalls you hadn't considered.
Strategies for Early Engagement:
Engage in Casual Settings: Instead of formal pitches, consider setting up coffee chats, attending workshops, or even participating in industry-related recreational events.
Share Milestones: Every time your company achieves a significant milestone, share it with your potential investor list. This keeps them informed and creates a narrative of progress.
Ask for Advice: People appreciate when their expertise is recognized. By seeking advice (not money) from potential investors early on, you show respect for their experience and insights.
Join Investor-related Events: Many investors and VC firms host or attend networking events, workshops, or webinars. Participating in these can help in building those early connections.
Transitioning from Relationship to Fundraising:
When the time comes to seek actual investment:
The Ask Becomes Easier: Having already established a relationship, the shift to discussing investment becomes more of a natural progression rather than a cold ask.
Higher Chances of Success: An investor who has seen your journey, understands your business, and has developed a rapport with you is more likely to invest compared to someone hearing about your business for the first time.
Negotiation Dynamics: A relationship built on mutual respect can lead to more balanced and fair negotiations.
11. Tech Events & Conferences
This list is by no meaexhausti eive. It's essential to stay updated with industry-specific news and platforms to discover neven snts. Also, remember that the COVID-19 pandemic led to a surge in virtual events, which can provide a broader reach without the need for travel.
Here's a list of prominent events and summits that founders may find useful for networking and meeting potential investors:
1. Tech Events & Conferences:
Web Summit: Held in Lisbon, it's one of the largest tech conferences in the world. Many startups and investors attend.
TechCrunch Disrupt: An annual conference hosted by TechCrunch in various locations, known for its startup pitch competition.
Slush: Held in Helsinki, it's one of Europe's leading startup events, attracting a considerable number of investors.
2. Sector-Specific Events:
Depending on your industry, there might be niche conferences particularly valuable:
Fintech Connect: For those in the fintech space, held in London.
BIO International Convention: For biotech startups.
Mobile World Congress: For businesses in the mobile tech space.
3. Investor-focused Gatherings:
SuperInvestor: A global private equity and venture capital event.
NOAH Conference: Held in various European cities, this conference brings together executives, investors, and startups.
4. Startup Pitches & Competitions:
Seedstars Summit: An event for startups from emerging markets.
Startup Grind: A global startup community, offering events in numerous cities.
Pioneers Festival: Held in Vienna, it's a gathering of tech founders and investors.
5. Local & Regional Events:
London Tech Week: A week-long festival of tech and innovation held in London.
Northern Tech Awards: Celebrating tech achievements in the North of the UK.
The Europas: An event focused on Europe's most innovative startups.
6. Accelerators & Incubators' Demo Days:
Y Combinator Demo Day: A bi-annual event where YC batch companies showcase their progress to a room full of investors (YC is based in the US) .
Techstars Demo Day: Similar to YC, Techstars also holds a demo day for their batch companies.
Focal: An event for startups that don't need to go through an accelerator to participate in a demo day. All of it is virtual.
7. Networking Events:
Meetup: Various investor networking events can be found on Meetup.com, tailored to specific industries or regions.
Eventbrite: Another platform where founders can find local investor meetups or networking events.
8. Diversity-focused Events:
Women Who Tech: A global network that promotes women in technology and startups.
AfroTech: A conference that celebrates Black tech professionals, founders, and investors.
9. University & Alumni Events:
Entrepreneurship Forums: Many universities host annual forums or events connecting alumni and students with investors.
Startup Weekends: Often sponsored by universities, these events allow networking with local investors and industry experts.
10. Eco & Green Tech Events:
EcoTech Summit: Focusing on green technologies and sustainable startups.
CleanEquity Monaco: An event for emerging cleantech and resource efficiency companies.
Finding investors in the UK, as with anywhere, requires persistence, preparation, and the ability to demonstrate value. With the right approach and a compelling proposition, attracting investment becomes an achievable goal, setting your business up for success. We wish you the best of luck finding investors for your startup. Feel free to reach out to the team at any point during your fundraising journey.