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How to win the race to investment

How to win the race to investment

Starting a business is not an easy feat by any means, especially with regards to finances. Self-funding can only go so far, even with healthy returns from the business. With so many fresh entrepreneurial ideas surfacing during Covid-19, the race to attract investment intensifies, particularly for those not able to self-fund long-term. Having a solid

Starting a business is not an easy feat by any means, especially with regards to finances. Self-funding can only go so far, even with healthy returns from the business. With so many fresh entrepreneurial ideas surfacing during Covid-19, the race to attract investment intensifies, particularly for those not able to self-fund long-term.

Having a solid foundation of business fundamentals is essential to keeping your business ahead of your competition, as well as for being prepared to deal with all the hurdles new ventures most commonly encounter. Keeping the business ahead of competition and being prepared to deal with hurdles is paramount to attracting investors and stakeholders.

Genny Ghanimeh, founder and CEO of Mind Academy Tribe and Mind Cloud Academy, which delivers educational programmes to emerging entrepreneurs, shares her top tips to attracting the investment you need, when you need it.

Starting a business? Here’s what you need to know

Genny Ghanimeh, Founder of Mind Cloud Academy and Mind Cloud Tribe looks at the growth of start-ups in the wake of the pandemic

Know the problem you are solving

There are several ways to get ahead of the game when it comes to securing funding for a new business. The first point of focus should be to home in on the solution(s) that the brand provides to a real problem.

A brand is bound to be successful if the target audience is currently looking for a solution for it. It is important to note that building a brand for a local community is not enough to attract investors – who would want to invest in a company that has a limited audience?Efforts to understand how a global audience can be reached with the product do not go to waste if it means the brand can interest external funding to keep growing.

Investing in a market research campaign prior to developing the product would help build a strong foundation for the product to excel in the long run.

Have a solid business plan

Having internal processes and a reliable business model in place is a must for any venture seeking funding.

Questions from investors cannot be avoided, even if they point to any minor details. This is fair, considering they are putting not only their money, but their trust in you and your venture.

Entertain all questions – but also ensure that the business plan is airtight with minimal room for doubt. A simple yet detailed format is required to keep investors interested. It is imperative to include all the key points in an executive summary, so it is laid out for the investor to understand easily. Incorporating numbers that show success of your business to date, as well as any assumptions, is crucial to attract and maintain investor interest.

Investing in a market research campaign prior to developing the product would help build a strong foundation for the product  to excel in the long run

Solid financial forecast and positive cashflow

A good financial track record and plan is likely the most significant pillar in building a business and attracting investors. Setting up a financial forecast helps to understand any patterns in cashflow and spending. This should be set up to be completed monthly for a year or two at least, which would help predict seasonal fluctuations in finances.

A financial forecast is simply another asset that shows professionalism, drive to succeed, and promise of the product to investors. A basic balance sheet, profit and loss account, and cash flow statement at the very least are essential to present to investors. A basic yet obvious factor to account for is how well the product will do to make money through customers, as opposed to investors.

If a product relies solely on an investor’s funding, it isn’t fit for the market. There needs to be proof that the product has done well outside of kickstarter and can sell in the real world. This not only helps to build a reputation for the product, which in turn lures investors, but also shows potential sponsors that their trust in the product is not misplaced.

Furthermore, acquiring customers will provide a chance for real product feedback – be it positive or negative. In essence, it’s free and real-time market research!

Get to know your investors as an extension of your team

Although it can be tempting to see investors as walking capital, it is important to get to know them and their view of the product.

Should they have criticisms of the product, take it into account and incorporate it into future strategies and proposals to strengthen the defence. They will question everything you propose, so be prepared to answer confidently, or courteously take it on the chin. It will only benefit the business long-term – despite the feeling of dejection in the moment.

Communication with your investors 

Another piece of advice would be to keep investors in the loop – update them on the status of funding, how fresh capital will be used in the business with a defence of how it will attract customers, and where you expect to be before closing a round of funding. The transparency helps develop trust and manages expectations as well.

Don’t forget your marketing and PR strategy

Lastly, get the name out there! The purpose is to attract investors, not approach them. A strong marketing and PR strategy helps if you wish to be recognised in the industry. Building a reputation puts the business and entrepreneur in a position of power and gives them leverage with investors.

Acquiring customers will provide a chance for real product feedback

Join an accelerator

Alongside securing funding, there are several factors to consider when starting a business. From building a minimum viable product to forming the A-team, it is crucial to keep on top of the minor details to ensure nothing slips through the cracks.

Four pillars of success for entrepreneurs

Genny Ghanimeh shares her four main pillars for entrepreneurs to keep in mind while growing their business.

“Number one is to be flexible. Everything is moving very fast and technology is becoming obsolete in six months sometimes. So they have to keep updating their businesses and be able to quickly identifying what’s not working and modifying it,” she says.

The second pillar is leveraging technology to meet the needs of the market, which is dominated by millennials seeking efficiency in the workplace and opportunities to grow, according to Ghanimeh.

“Entrepreneurs need to learn how to leverage technology by, for example, using MailChimp for emails or Zoho Books for accounting. If they don’t keep updating themselves with all these things, they would not be able to have an efficient workplace for their team and customers, she explains.

“The third point, which is very important, is processes. Establishing communication lines is key as operating in silos doesn’t work anymore and everyone needs to be working together. Wherever entrepreneurs can establish a process, they should go ahead. But that process has to be fluid so finding whatever works and opening that up,” she continues.

Ghanimeh’s last pillar focussed on the value of making mistakes. “The last thing for entrepreneurs is going back to the first step about being flexible and learn how to fail. When something is not working, it is fine to move forward into something else and see what’s working.”

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