Your business is thriving, you’ve prepared an ambitious growth strategy and you’re ready to approach investors to raise funds. You contact a specialist lender (for example, a venture debt or growth capital provider such as BOOST&Co, which helps companies to grow without sacrificing equity) and set up your first meeting. Things look promising, but what comes next?
First, make sure you’re fully prepared; click here to discover the eight factors we consider most important for businesses preparing to apply for growth capital. Next, it’s time to think about that first meeting – a crucial stage in the process, because your chances of securing a loan will decrease significantly if your potential investors aren’t impressed by your pitch.
So, what will they ask, and what do they want to hear? Sonia Powar is one of BOOST&Co’s partners, with more than 20 years’ experience of helping SMEs to raise funding to secure future growth. Here, she reveals the key questions she asks management teams, explaining what she is trying to find out and how, ideally, you should respond.
What is unique about your business?
“I expect a management team to describe succinctly what’s different about their company, compared with their competitors. I don’t believe that many businesses are unique, but everyone should be able to articulate what their differences are. It could be the product, but it could also be the operational processes, the route to market or even the delivery.”
Tell me about your management team.
“I want to see that I’m dealing with a team and not just an individual who is trying to do everything on their own. The team should consist of like-minded, ambitious people who all contribute and who recognise the value that each individual brings. It’s also great when a team uses external resources such as non-executive directors, as the need arises. I want to feel that I’m backing a group who will work well together when the unexpected happens.”
How will you stay ahead of the competition?
“This is about recognising that although you’re raising money and developing your business, it’s likely that your rivals are too – and possibly even faster than you. How will you ensure that you stay one step ahead? How are you going to maintain whatever advantages you currently have? I expect management teams to be able to demonstrate that they are thinking about the changing competitive dynamics, as well as the changes occurring in their own firm.”
How are you going to spend the money?
“A management team should be able to articulate clearly how they plan to use growth capital and what impact they expect it to have on their business. They should be able to provide evidence that spending the money in the way they intend will deliver the results that they are forecasting.”
What keeps you awake at night?
“I ask this question to identify the issues that worry management teams. There are no plans without risk, and this question helps me to understand the real risks in their plans. A team must be able to identify the risks, address them and then minimise them.”
What will you do if your business doesn’t grow as fast as you plan?
“Most, if not all, entrepreneurs are optimistic by nature and believe that their projections are achievable. We want to believe this, too, but we also want to know that a management team has a back-up plan or two, comprising the actions they will take if their forecasts don’t quite come off.”
What are your ambitions for the business?
“This question reveals what individuals want to achieve and what they want the company to achieve, and how this correlates with their deck. It gives me an idea of what drives them. In the first meeting, it’s all about belief: the key is to leave your potential investor feeling that they want to back you, and believing that your team can identify opportunities and risks, as well as adapt and modify your business plan to achieve the overall goal.”
Given the devastating impact of the Covid-19 pandemic on the UK economy, there’s no time to lose for companies that need funding to ensure continued growth. BOOST&Co offers venture debt and growth capital in the form of term loans, through its existing product and also via the government’s Coronavirus Business Interruption Loan Scheme (CBILS).
If this type of funding could work for you, follow Sonia’s advice above and get in touch.