How to prepare your company for investment

David Newns is a serial investor and entrepreneur and co-founder of Mustard Kick, which helps fast-growth businesses exit.

I've invested in more than 25 innovative companies over the past 10 years. They have made women safer on the streets and children more protected online, boosted people’s health on the one hand and given us all more entertainment from top creators on the other. Each investment had an exciting concept at its heart, but it was the founder that I invested in more than the idea: my investment platforms put money into entrepreneur-driven businesses.

Every startup pivots, often multiple times, but the entrepreneurs running the business should have traits that are as constant as the north star: unusually determined to succeed, brilliant at hiring people better than them, incredibly hard-working, super focused on their mission, insatiably curious. So being an investable founder is important.

With many different stages of investment, Startups Magazine readers probably are more interested in seed, venture capital, and growth capital. 

As these are targeting different stages of growth, they have different requirements. Demonstrating readiness for each type of investment is crucial, however. As a disruptive entrepreneur focused on innovation businesses, more than most investors I’m looking for founders with a strong vision and a compelling mission. So, make sure you articulate this as passionately as possible.

An investable team

Beyond that, my team and I look for a strong management team capable of delivering the mission. So, highlight key hires and their expertise, showcasing a well-rounded team capable of executing the business plan.

Clear plans

Talking of plans, have a clear business plan. Develop a comprehensive roadmap that outlines short-term and long-term goals, revenue projections, market analysis, and scalability plans. That said, at a venture capital level, I think it’s more important for you to have good ideas on how to grow the business. As a hands-on investor, I enjoy adding strategic value, so I’m happy to support with scaling advice. Indeed, at Fearless Adventures, one of the businesses we support came to us with low-mid seven-figure sales per year and we were looking to quickly lift that to eight figures. So as investors we were able to show how to scale internationally and had a network to support it. For bigger businesses, however, say looking for growth loans from SME Capital, we’d expect the leadership team to have a firm idea of scaling, for instance a buy-and-build strategy with a clear rationale for their acquisition targets.

As an entrepreneur, my companies have focused on innovation and technology as a competitive edge. As much as I have a natural bias to that, many investors are looking for tech integration that is either unique (ideally) or at least deployed in a way that enhances operational efficiency, innovation, and scalability.

Open communication is vital

Transparency and communication is vitally important to me as an investor, whether it’s at an angel or higher level. Board meetings can - sadly - create an atmosphere where some investors and advisors show off to each other rather than add value to the investee. Personally, I’m a big fan of informal chats in a relaxed setting like lunch. It’s best for no topic to be off limits, and to adopt a ‘no stupid questions’ policy, so I believe a more chilled environment is effective. Both of us want to win, so you don’t want meetings to feel performative and restrained.

The right investors, not just the right amount of investment

The other piece to being investable is actually to find the right investors. It’s a big step, and you’re giving away part of your company for the chance to achieve your goals. Yes, cash is key, but it's wrong to think money is the only thing valuable to founders. Increasingly, I see entrepreneurs who want much more than financial support to help them grow. They want support from people who have been there and done it. People who can offer them time, belief, enthusiasm, expertise and a network to help them rise to the top. So make sure you try and find the best fit possible in that regard, not just a money source.

For UK businesses, the journey to investor confidence and investment readiness is a multifaceted endeavour. By emphasising a robust team, transparent financial health, proactive risk mitigation, technological innovation, and alignment with ESG principles, businesses can craft a compelling narrative that entices potential investors. Confidence in the business's potential for growth and sustainability becomes the cornerstone for securing the much-coveted investment and propelling the business to new heights.