A 10-step guide to raising investment


Raising finance for your business (or your business idea), particularly if you need equity investment is daunting. Many investment calls fail due to a lack of experience or an underestimation of the time, level of detail and the quality of information needed to secure a deal.

Below is a ten-step guide to raising the investment you need. I can’t guarantee you will get what you want, however, following the process will significantly increase your chances of success.

Step 1 – Understand the amount and purpose of the investment – You know your business better than anyone. Have a clear understanding of how much investment you need, how that cash will be utilised and what the potential outcome will be. Having a great story is fine, but be very clear about what’s in it for the investor

Step 2 – Get specialist advice – Whilst most business owners think they can do a fundraise themselves, many fail due to a lack of experience and contacts.  Instead, you should focus on the things you can do, running the business and developing your team. Get support for the fundraise by putting together a team of experts and trusted advisers. The right advisers can significantly accelerate the fundraising process and help you maintain focus during the whole process.  Select your advisers carefully, find people with connections and experience with a proven track record in securing funding.

Step 3 – Build your funding pack – Investors want information, you won’t get away with poor quality information or a second-rate presentation.  You will need a business plan and at least 3 years forecasts, which should be credible, backed by evidence and consist of integrated P & L, Balance Sheet and Cash-flow forecasts.  Most importantly, you will need a compelling, succinct, and visually attractive pitch deck.

Step 4 – Define what your ideal investor looks like – Do you want a business Angel (or Angels), someone with experience and contacts who will pitch in and work on the business, or are you looking for a hands-off institutional or crowdfunded investment? If you are pre-revenue, your options may be restricted somewhat, so be prepared to rule out some of the more main-stream sources of investment at this stage.

Step 5 – Build a list of potential investors – This is where your funding expert can help. As well as the obvious, highly publicised, and mainstream sources of investment, there are many individuals and groups, known only to a select few. Spread your risk and avoid time wasters by building relationships with more than one potential investor and learn what they look for in the investments they make.

Step 6 – Prepare your marketing plan – Treat the search for an investor as you would a search for new customers. Build your funnel, create an investment landing page on your website, be active and professional with press & social media, present your business in the form of a Teaser / Pitch Deck. Communicate your progress through regular newsletters and mailings.

Step 7 – Contact potential investors – Present your opportunity through direct discussions with potential investors, don’t be afraid to pick up the phone. As well as an appetite to invest, ensure that there is also a cultural fit between your company and any potential investor. Concentrate on those investors who show active engagement with you.

Step 8 – Negotiate the basic terms – The main aspects of any deal should be agreed before you seek any kind of written commitment. Be reasonable about the value of your business and the amount of equity you are prepared to surrender. Professional investors are unlikely to take advantage of you as this will hurt them if further funding rounds need to take place.

Step 9 – Due diligence – Investors will want to know exactly what they are buying into, so expect to be asked a lot of questions and be honest an up-front with any negative issues. If you are managing your business correctly, keeping good records and meeting all your statutory requirements, you will be able to provide credible answers in a timely manner. If not, prepare for delays and a lot of extra work.

Step 10 – Legal Agreements – The main aspects of a deal were defined in step 8, however, the details will need to be agreed and legally implemented. Use experienced commercial legal advisers for this step it will minimise future. The deal is only done when signing is complete, and any closing conditions have been fulfilled. – and be prepared for a sizeable bill at the end.

If you have an accountant, they should be your first stop for business advice. If you don’t have an accountant or they can’t help, BuBul has a wide range of experts available. For more advice on getting ready for investment, contact our expert* Jeff on LinkedIn.

*We’ve picked experts we know and trust who are good at what they do. All of them will give you at least an extra 30 minutes free advice if you contact them and would then charge their normal prices. They don’t pay to be on BuBul and don’t give us any money from anything they earn as an expert.