10 Digital Ladies ran an event earlier this month to help female founders better understand more about what it takes to raise their first equity investment. We focused on how to get in front of angel (individual) investors, and then how to make the best possible impression.
The event was hosted by 10 Digital Ladies co founder Nina Lovelace, and 10DL 2018 Entrepreneur of the Year Award winner Jo Osborne. Jo is CEO and Founder of EVRELAB, the company behind SkinNinja, a free app that enables people to discover more about their skincare, cosmetics and personal care products’ ingredients and what the science says about them. Jo and Nina were joined by:
- Colin Gillespie, angel investor and champion of women-led businesses. He is also Chief Strategy Officer at All Response Media.
- Rachelle Mills, CEO and Co-Founder of KareInn, which helps leading care providers transform their care delivery, making operations run more smoothly and improving elderly resident’s health & wellbeing
- Kasia Michalska, Founder & CEO at Ralloo, the UK’s first micro-sponsorship platform. Ralloo matches projects looking for funds with brands that want to support them and
- Amber Fraser, Co Founder of Brave Food, a company all about doing the right thing and having the courage to take that exciting, first step towards something better.
- Get a feel for whether your best route is angel investment or VC (venture capital) – or you may waste precious time. Said Kasia, “We made a mistake and went straight to VCs… and although we had very positive feedback, it was a waste of time as it was too early. We never heard no, it was always come back in 3 months…. it gets your hopes up. But angels gave us our funding almost immediately.” Although each company is different, a rule of thumb would be that your company is not VC ready until it’s seeking at least 500k of investment, is clear on its business model and return on investment, the panel agreed. Rachelle added, “VCs are looking at things like market size, whether or not there is an obvious need / fits a proven existing need (think Uber vs SpaceX) and the trends of that market space.”
- Apply for assurance for the Seed Enterprise Investment Scheme and Enterprise Investment Scheme if your company is eligible. These schemes offer offering tax reliefs to individual investors who buy new shares in your company. HMRC advance assurance for these schemes will often be a prerequisite for angels and angel networks.
- Develop a punchy, 10 slide pitch deck. Kasia said, “The pitch deck is critical. That’s the thing that gets you through the door. We had lots in the deck but we then slimmed it down so we only had a few key messages. Less is more.” Key slides should cover what problem(s) your business solves, why your business is the solution, your traction/sales to date, financial forecasts, go to market plans and a slide on the credibility of your top team. It’s also crucial to know your competition. Investors see a lot of decks, will know who else is in your space – so how is your company better, and different? Amber added, “Be clear about why you need investment: why now, why this much, and have a clear idea of what this cash is going to help to achieve. Some founders want to ‘raise’ but aren’t able to quite articulate the whys.”
- Be careful who you meet. Said Kasia, “Don’t jump into every single meeting with a “potential investor”, do investor due-diligence, preserve your resources. Also, recognize quickly investors who will not invest despite the initial interest.” The panel added that quality angels often make introductions to other angels, and some angel networks can help you meet more individual investors, faster (in return for a fee). Always be ready to pitch however, as you never know what could happen, added Rachelle. “I thought I was meeting to demo our platform, but in the end they both adopted the system and invested in our company because they believe in what we are doing.”
- When you get the chance to present, tell a story. “Do not underestimate the power of idea over the robustness of the spreadsheet,” said Colin. “You don’t always need screens to sell your product. My portfolio is so broad – because I invest in people and the pitch. I need to buy into the person before I even look into their spreadsheets.”
- You absolutely must be able to defend your financial assumptions, however. Jo said, “Investors want to see the hockey stick (startup growth assumptions) – but you need to make sure you know and are able to defend those numbers.” Angels will want to see a reasonable return on investment over a 4-5 year time frame. Amber added, “Financial plans (pre revenue) are mostly wrong, but the exercise of pulling them together is incredibly important.”
- When you start to get interest, “think about taking the smart money, not any money,” added angel investor Colin. The best investors are those who are genuinely interested in your business and who are willing and able to maximise your chances of success. Jo added, “Really good investors…can advise you and offer you access to their network.”
- Stay curious in the face of scepticism or rejection, advised the panel. Don’t respond poorly or become despondent if angels pass, said Jo. “Take the feedback as an opportunity (to learn), and try and keep it positive. For example, if an investor gives you feedback and it is something you can correct such as: “you haven’t proven X, that’s why I will not invest” you should bat back along the lines of: “Thank you for that feedback. So that I am clear, if I can come back to you with proof of X, you will invest?”. Kasia added, “A lesson I learnt is to listen to their questions – it’s not always about saying what you want to say. Answer them honestly.”
- Just because you are female or identify as being female, don’t assume female focused investors will invest in your company. “They look at merit the same way everyone else does,” said Jo. “By all means, call out the time wasters but also appreciate that there are also many people who are on your side and trying to help you and the industry at large even if they are not prepared to invest in your business at this stage. There are always future rounds and you might want to keep that door open.”
- Show up or project yourself to investors in a way that gives you strength, the panel agreed. It is a performance, but it’s not an act. “If you need a power outfit that’s ok. Be who you are, be honest.” said Jo. There was an interesting audience chat after the panel discussion about the balance that needs to be struck between being authentic, but also obviously highlighting your achievements. Pitching is no time for hiding lights under bushels, the panel agreed.
A massive thanks again to our panel for their time and energy, our sponsors Photobox for the venue, and our sponsors Bright Innovation for their help collating this blog.
Our next event is tomorrow! Join is for Is the job interview a barrier to achieving diversity in the workplace? on April 25th evening. To sign up please head over to: https://www.meetup.com/10-Digital-Ladies/events/260250289/
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