Getting investor-ready

Whether you are looking to get your idea off the ground or are further down the line ready to start trading or create cash runway to scale, it’s important to have your house in order to ensure a smooth investment journey.

Here are some top tips for getting ready:

Be clear on your figures

Have clear in your mind the level of investment you need, why and what you will use it for. This ensures open conversations with potential investors at an early stage, providing an opportunity to work together on the numbers and achieve the right investment. Ahead of those conversations, make sure you work through the numbers and core KPIs for your business and the markets you operate in or hope to reach. Seeking professional financial advice could be valuable in getting this right.

You should also have a good sense of the equity ownership you are willing to give up. How far are you willing to be diluted by institutional investment? Think also about the size of any share option pool likely to be created to attract and retain talented people.

Have a strong talented team

Investors will want to know you have the right team to support the business as it moves forward. Venture capital firms and business angels are often investing in an idea and the people who can develop and market it – meaning your team can be your strongest asset.

Be paper ready

Investors will ask to see a wide range of information as part of their investment analysis, which is likely to include:

· Share cap table – A list of who owns what shares in your company and any unexercised share options. If you have a share scheme in place, provide the specific paperwork relating to that.

· Statutory registers – These are prepared on the company’s incorporation and should be maintained. The “register of members” provides definitive evidence of share ownership.

· Shareholders’ agreement – Investors will want to see any existing agreement which regulates the relationship between your existing shareholders.

· Articles of association – These are a company’s constitution and are available at Companies House. They focus principally on governance matters, rights attaching to any shares issued and practical steps for issuing or transferring shares.

· Intellectual property rights – Make sure you can evidence ownership of any material IPR. IPR often underpins value and investors will want to know it has been protected.

· Employee information – Who is employed by the business, how long have they been in role and what is their expertise? Provide copies of their contract terms.

· Financials – Ensure your annual accounts, any management accounts, business plan, cash flow forecasts and budget are up-to-date.

Due diligence your investors

Do research your possible investors. What else can they offer beyond financial support? Do they have genuine knowledge of the industry and market in which you operate. Have they a valuable network of connections to introduce? Can you speak to someone they have already supported to understand what their investment experience has been. Often an investor will appoint someone from within their team to be an investor director (or observer) on your board. Try to get to know them and understand how they operate, who they know and what their reputation is.

TLT advises ambitious businesses looking to grow and raise investment at all stages on their journey. Please do get in touch if you would like to chat through any of the above.