Growth Through Investment, During Lockdown and Beyond
GC Angels Investment Director Jessica Jackson, and Black Nova Group's Head of Partnerships, Alex Lennon joined a lively and engaging webinar hosted by Heather Gray, Business Development Manager at Bruntwood Works last week.
Attendees were given insights into investment in the UK and how Covid-19 has affected the market. With nearly 80% of SMEs citing declining revenues throughout 2020, many are looking to see what capital options are available to them.
Market Impact of COVID19
In the past 4 months, the COVID-19 pandemic has affected every aspect of life including investment patterns. Nationally, the first-time raises have dropped dramatically. At the seed level, data is showing that investors are uncertain about funding new deals and there is a 70% drop off rate. Venture Capital has slowed down dramatically. Angel investors, however, are investing at a higher volume but a lower deal size. Pre-seed / seed investments have been hit the hardest but there are still deals happening and new opportunities.
Under ‘normal circumstance’, the average time for an investment round to complete is 6 months. To find the right investor, businesses must network as much as possible to increase your chances of success. Currently, it is worth expanding the time in which they seek investment – making the most out of the furlough scheme or bounce back loans. Being smart with business options, SMEs are likely to get a better rate of success when there is more knowledge about the effects of COVID19 on the economy. SMEs should take the time to get a clear idea of what they are looking for and why.
Know your numbers!
What should an SME do to succeed? Remember, investment should be the fuel and not the fire. Investment should be an option if businesses are looking to grow rather than used to keep afloat. Have a clear business plan and projection. Founders should know what results they are expecting after they’ve funded their growth plans. It is fundamental that start-ups know where they are going and where they are going to make a profit.
All businesses looking for equity investment should have a sharp ‘evaluator pitch’ and an interesting, clear slide deck. Investors see hundreds of businesses, so they need to make sure that their pitch stands out. Pitches should be clear, concise and help investors understand the gap in the market and how it is being filled, the problems that are being solved and ultimately, how they are going to make a profit. Practice makes perfect! Founders should practice their pitches on several people from different backgrounds who are new to their business concept.
Problems that are tedious to solve often make for the most innovative solutions. If the problem or sector that the founder is working in is uninteresting, then set up a thought-provoking, exciting solution. For example, working from home has befallen onto many of us unexpectantly and many companies have seen opportunities to come up with excellent market solutions. This is exciting as so many of us can relate to the problem that is being solved.
Currently, due to these unprecedented times, businesses are very unlikely to close investments in the way they expected to. Businesses should always have a plan B. E.g. if you planned on spending £80k on marketing, plan what you would do if you only had £20k.
Getting investment ready
If it makes sense for the business to seek angel investment, then there is support available to make sure that you are investment-ready. GC Angels are part of The Growth Company, which has a thriving Business Growth Hub that has a variety of free to access programmes for SMEs at any maturity stage. Access to Finance provides SMEs with bespoke funding support, signposting the products and providers which will unlock their business growth.
Access 2 Finance within the Business Growth Hub also specialise in getting SMEs investment ready by providing support with their pitch, business plan and financial forecast. There are also accelerator programmes and free to access courses that are especially geared for North West based SMEs.
Meeting Angel Investors
If the business is investor-ready, the next step is to be introduced to business angels. GC Angels provide SMEs across the north with access to investors. For the best chance of success, businesses should speak to as many angel networks as possible to find the investor who is the most suitable. There are many free to access angel networks, if asked for a fee upfront, make sure that there is a clear delivery plan!
The final note was to stay positive! Google and PayPal were founded during the dotcom crash and Airbnb and Dropbox were founded during the global financial crisis. There is no doubt that the northern start-up community contains rising stars. With disruption there comes opening and with adversity comes opportunities.
A bit about the speakers:
Jessica Jackson joined GC Angels as Investment Director in 2018, bringing along a wealth of experience providing investment and business support for start-ups and small businesses with high growth potential. Jess has since become a leading figure in Manchester's investment community, where she champions investment in female and BAME founders. Her initiative #laterpitches gives business owners a safe space to practice and refine their investment proposition, with constructive and encouraging feedback.
Alex Lennon is responsible for growing the Black Nova Group's Partnership model in the UK, helping entrepreneurs dream, build and grow their start-ups to reach their potential. They support businesses from incubation (within their Nebula program) to launch and beyond, providing services across Investment, Go-to-Market, Product and Talent, to empower the next generation of iconic companies. Alex feels passionate in providing a transparent, bespoke and robust service to everyone he works with, advocating that this should be the industry standard for those about to make a big decision, a career choice, or starting a business.