However, with the COVID-19 pandemic forcing online much of what was previously done face to face, startups in the regions have an unprecedented opportunity - investors are now more willing to conduct due diligence and other elements of their process remotely, levelling the playing field for startups across the country that previously might have suffered from investors’ London-centric focus.

After all, it doesn’t matter where in the country you are when everywhere is a video call away - with geographical bias out of the equation, startups from anywhere can be truly judged on their merit alone. Now the challenge is ensuring that these regional businesses are able to capitalise on the opportunity.

What do businesses need to show investors?

While investors are now more open to investing further afield than usual, widespread economic uncertainty means they are also looking for more reassurance from businesses before they invest. This is understandable - a significant part of the investment process has always been meeting the team, making sure personalities match up, and getting a first-hand look at the business.

This has been well documented with studies from Michael Frese and Michael Gielnik that analyse the desired traits of entrepreneurs, and what investors look for in a successful founder. All of this is much more difficult to do online. Founders can help accelerate and smooth this process by understanding what investors are looking for, and having this prepared beforehand. This includes being able to demonstrate that they have analysed their potential market, and that they understand how COVID has impacted it.

Also, while opportunism can be a good thing - and plenty of businesses founded to (or pivoting to) solve problems created by COVID are doing well - founders should also be prepared to show that their business is going to have a life beyond this pandemic. Early-stage investors invest with a very long time horizon, generally seven to ten years - they will be looking for ideas that solve the problems of tomorrow, not just today.

Don’t be afraid to leverage the expertise of your investors. Any good investor will want to help your business grow, meaning they will be happy to have strategy calls and provide advice on business operations and hiring. This is not to say you should hand off all decisions to your investors, but they have often had experience of what works and what doesn’t, and can provide valuable guidance in tough times. This will require founders to be honest with themselves, and potential investors about what they are worried about, and where they need the most help.

Where should founders look for investors?

One avenue that has helped startups find funding is accelerator programmes. However, 65% of accelerators in the UK are based in London, and many required the founders to be physically present throughout the programme. This is often too much of a commitment for many founders, requiring them to be away from their business and employees for long periods of time. This has meant the majority of investors looking at accelerators would see London businesses first.

This has changed, with accelerators forced to move to a virtual setup, meaning a founder in Inverness can attend an accelerator that was previously inaccessible to them. We have seen the impact of this change to virtual events, with more investors attending accelerator demo days and workshops as they no longer have to worry about travel times. Therefore, entrepreneurs based in regional areas should now consider these programmes that they might previously have written off as simply impractical.

It is vital that entrepreneurs find the right investors for their business. Investors should add value to the business, whether that is through advice or opening up closed doors. If you are seeking investment it pays to find investors who have experience in your sector. Search investors websites, see what companies they have invested in the past, and ask around to see what they have been able to bring to other companies. It is important to remember that just because there is now more opportunity for regional businesses, you shouldn’t simply choose the first investors that come knocking.

How to make the change permanent

It is also crucial that we make sure that this positive change becomes permanent. Enabling regional founders to have access to investors usually focused on London will help level-up the whole of the UK, while also enabling investors to build stronger, more diverse portfolios. However, for this to be the case investors need to believe that great companies can be founded in the Lake District as easily as they can be in London.

It is equally important to make sure that mechanisms to help channel this funding out into the regions, including virtual accelerators and pitching events, are used to their fullest. This is where schemes like the British Business Bank’s regional funding plan can help. Partnering with funds to match investment into regional businesses combines the expertise of seasoned investors with the local knowledge needed to find the best companies.

Finally, investors can take more steps to help address the imbalance. Simple ideas such as hosting specific office hours for regional founders can help expand their network, specifically attending regional meet ups are all easy to do. Once this network is established it will become a self-fulfilling system, as local founders can introduce new entrepreneurs to previous investors. 

COVID-19 has caused a massive shock to people’s lives, and the global economy. However, by arming regional startups with the right knowledge and encouraging investors to look further afield, we can create some long-lasting positive changes for regional areas. This environment has shown that virtual can work just as well as physical. Now is the time to make sure the rest of the UK is levelling up the same as the capital, and show that disruption can come from anywhere.