Tech start-ups have been the lifeblood of an emerging economy for some years now and remain a highly attractive prospect for new entrepreneurs in the UK. With still-burgeoning markets for cutting-edge developments in fintech, blockchain, life sciences and more, there are fertile lands in which to gain purchase as a tech savant.
However, no matter how good your idea or industry knowledge may be, there is no guarantee of success in a starting a tech business. Indeed, tech start-ups are undoubtedly risky, with as many as 1 in 5 failing in their first year. The key requirement for these new businesses is investment – and even in an investment-rich environment like tech, it can be difficult to know where to look with respect to your own business. This brief guide runs through some of the key steps for securing investment and giving your tech start-up the best possible chance of success.
1. Understanding Your Funding Needs
Firstly, you will need to have a solid idea of your funding needs. What is it exactly that you are funding, and how much will you need to fund it? This necessitates the creation of a comprehensive business plan, starting with a one-page treatment of your business idea and plans for enaction.
Your business plan should extend from a six-month plan to a five-year plan, outlining key milestones and objectives along the way. This will make it much easier for potential investors and your business partners to better understand your financial needs. You should back up your business plan with up-to-date credible data from customer and market analysis, in order to strengthen your pitch to investors.
3. Developing a Compelling Pitch
Your business plan alone might be enough to secure funds from banks and mainstream lenders – but if your ambitions are greater, then you’ll be spreading your net wider than your local bank branch. As such, you’ll want to create a polished pitch document and presentation, which explains your business plans in detail, its product or service, and your financial needs.
4. Identifying Potential Investors
The hardest part of the process is finding the right investors to pursue. There are several options for investment, some of which are more accessible than others but can come with their own potentially growth limiting caveats. For instance, angel investment and crowdfunding platforms enable you to receive funding from a pool of investors or supporters, but often with restrictions in the form of high interest or minimum fundraising limits. The conventional route is via venture capital, which requires networking and pitch meetings with industry leaders and tech supporters in your field.
5. Closing the Deal
With investors identified, the final step is to close the deal. You don’t want to do this without some form of legal counsel under your employ, as the receipt of investment funding does not come without a tranche of legal and administrative documentation. You’ll be in a stronger position to negotiate fair investment terms, and to better manage the money as it arrives. With a shake of the hand, your business could be fully funded.
