The secret to massively improving your chance of gaining investment
Many entrepreneurs see the increasing levels of investment here in the UK as a sign that raising investment for your business is easier than ever before. The truth is quite the opposite.
While investment in UK businesses may be growing (72% in the last 2 years) the number of deals is actually falling (by about 6%). And in truth, the 72% of growth is massively skewed by a handful of very large deals.
When you delve into the figures, you actually see a different picture. Getting investment at an early stage is increasingly tough.
The majority of growth is seen in Venture stage investments — not Seed. As the market matures, we see Angels getting more sophisticated. They expect more from their investment opportunities. And why wouldn’t they, they’re spoilt for choice.
The simple fact of the matter is, with the number of startups growing at 14% in the past year, it’s a simple case of supply far outstripping demand. Giving Angels more choice, and founders less chance.
Research we’ve conducted at Robot Mascot shows that a typical Angel Investor will receive 10 pitch decks a week, of which 1 will be selected for further discussion. On average this will turn into 2 investments per year of £20k each.
That’s 520 pitch decks per year, whittled down to just 2 investments. A 0.4% conversion rate.
It’s little wonder then that less than 1% of businesses effectively raise investment via Angels and VCs combined.
The research we conducted at Robot Mascot also suggests that the biggest barrier to success is not the business plan, financials or due diligence, but the pitch itself, or more specifically — being able to articulate the business idea in a clear and concise way.
Over 90% of investors asked agreed that not being able to understand the business was their biggest frustration when it comes to an investment pitch.
In order to give yourself the best chance of gaining investment, you must approach your fundraising campaign from a marketing and communications perspective.
You cannot rely on your idea. And a solid business plan isn’t enough. You have to create pitch assets that communicate your idea clearly, and in a way that makes your business credible and investable.
Get this right and your chances increase dramatically.
Our clients have seen for themselves the power of getting the communication right. It’s why they’re 30x more likely to raise investment.
Instead of having a 1 in 100 chance, they’ve given themselves a 1 in 3 chance of convincing each and every investor who sees their pitch.
I much prefer those odds.
So before you go back to the drawing board and rework your business plan or update your financials, work instead on your written and visual communication — and you’ll be able to increase your chances too.