How to get funding for your start-up

Four months ago I teamed up with a British businessman Lord Waheed Alli to launch a start-up investment fund. We invest in innovative, consumer-facing businesses, run by women and/or minority founders. So far we have reviewed 75 investment opportunities and invested in two of them. I attended several pitch events, sifted through some excellent (and some terrible) presentations, downloaded many new apps and spoke to founders based in New York, LA, Bangalore, Cambridge and, of course, London. It's been a fascinating journey so far, I've learned a lot quickly and thought I'd share some insights here with you.    

The obvious place to start is to tell you about the companies we have invested in and why. The first company is called Outfox Drinks - it's a new brand of "dry" wine launching this summer in the UK. Outfox wines are completely alcohol-free, they taste great and are low sugar and calories. They are great for socialising if you are a teetotaller or are simply having a "dry" night, but aren't keen on having yet another glass of water or a carbonated sugary drink. 

I met Jessica, the founder of Outfox Drinks, at a pitch event at the AllBright Club. I was immediately impressed by her presentation: it was clear that her start-up was solving a problem and targeting a large and growing consumer market. Jessica was previously at Kraft Foods where she looked after Vita Coco, which means she has a direct and relevant experience of growing a beverage brand. Jessica appeared to be confident and her presentation materials were superb. I wasn't looking to invest in a consumer product but her pitch was the best - she caught my attention. Ultimately, we decided to invest in Outfox because it offered an innovative product which tasted great, had an immediate appeal as a brand and because we liked the founder.  

Our second investment is Olio - a neighbour-to-neighbour surplus food sharing app. Olio helps people and businesses give away unwanted food rather than waste it. The reason Olio is a compelling business became obvious as soon as I downloaded the app: there were 6,000 Olio users within a 5km radius from me; someone just posted a loaf of proper spelt sourdough bread unsold during the day by a local bakery - I requested it, made pick-up arrangements and got a free loaf of the best sourdough I'd ever tasted. I also got rid of spice mixes I don't use within a minute(!) of posting them on the app. Some entrepreneurial fellow posted "25% the food bill at your local restaurant" - the ad was soon taken down by the company but this is precisely how Olio is going to make money once they activate their revenue model. They are already getting paid by some retailers to pick up their unsold food such as sandwiches and give it away via the app.

Olio was designed to solve a huge and acute problem. It is tapping into the rising awareness of food waste and sustainability globally.  The company's founders, Tessa and Saasha, impressed me as ambitious, super hard-working and capable. Olio is innovative, fast-growing, and it makes a real positive impact on local communities. 

Now let me give you a few specific tips on how to get attention from potential investors.

1. Make yourself stand out

Angel investors, VC funds and investor syndicates receive a dozen of pitches a day. They don't have time to meet every single entrepreneur for a coffee - they would be permanently wired and exhausted otherwise. When you are getting in touch, spend hours to perfect your email so that it is short, straight to the point and has a hook. I won't meet you, I won't even open your presentation or click on a link to your website unless you have grabbed my attention within the first paragraph of your email. In the last four months I only met one person to hear out his pitch knowing nothing about it in advance. Why the exception? It was a lovely day and instead of offering to buy me a coffee, he suggested we go for a walk by the Thames. He stood out, I got hooked. (Sadly, his business idea wasn't very exciting...)

2. Get that pitch deck right

Presentations are hard, but if a pitch deck doesn't tell me why this is a golden opportunity, then I am likely to lose interest before we get a chance to meet. To give you a concrete example, Outfox Drinks pitch looked beautiful, told me everything about the target market, the problem and how it intends to solve it, the vision for the brand and the plan of how the company will get there. I got information on the founder. I learned about the competition. I got excited by the business plan and the unique selling points. I got facts and pretty pictures. A good pitch tells a story. A bad pitch is an amalgamation of disjointed slides. 

3. It's all about you

People investing in early stage businesses take on a lot of risk. Most start-ups fail no matter how brilliant their ideas are or how big is the addressable market. It's not even about the idea - it's all about execution. And who is in charge of that? You! Investors back entrepreneurs, not businesses. A start-up is too early to judge on its own merit so investors turn to the founder's background instead. It is no wonder that "serial entrepreneurs" find it relatively easy to raise money. Tessa and Saasha at Olio used to manage teams which gives me reassurance that as their start-up grows, they'll be able to hire, inspire and retain the best talent. As a founder, you have to sell yourself, so go through your CV and find the most relevant experience which will make you look investible. 

4. Remember that no one owes you anything

Even before I started my current role I met many entrepreneurs looking for funding. Most of them got a meeting with a potential angel investor through an introduction. Sometimes they were recommended by a more experienced founder; sometimes they knew someone who knew someone and scored a meeting as a favour. The thing is, all that glitters isn't gold. Even if you found a way to open doors, it doesn't mean that investors will meet you with a cheque book in hand. It is still all about you and your business. I once met two founders who wanted to launch a money saving app. They wanted to get funding before they even created a prototype. They were surprised I wasn't very impressed maybe because they thought their charm would do the trick. In reality, tons of businesses get to the stage of a minimum viable product on a shoestring budget - now that's impressive and will get you attention. 

5. Find a way to relate to the investor you are meeting

Finding a right investment opportunity is a numbers game. Flipping it around, entrepreneurs must be more discerning. It is true that you might end up speaking to dozens of investors, but put your best foot forward every time. This means finding a way to relate to the person you are speaking to. It's easy to do some research ahead of your pitch using LinkedIn, Twitter and other relevant online sources. Find an engaging way to break the ice and the conversation will flow much easier.

Also, remember that investors are biased. They don't mean to be, but they are only human. A 2016 study from the Entrepreneurs Network stated that only 9% of funding into UK start-ups went to women-run businesses. According to a Women in UK VC study commissioned by a non-profit organisation Diversity VC in 2017, only 18% of investment professionals in UK VCs are women and only 13% of decision-makers are female. 48% of UK VC firms have no women on their investment teams at all. It's pretty obvious that there is a correlation between mostly male decision-makers and mostly male founders getting funded. So if you are a woman looking for capital for your start-up, find female angel investors, investor syndicates focussed on female founders (e.g. Angel Academe) or approach female executives at VC funds. You may well find it easier to relate to them and vice versa.