Securing investment to drive your business can be the most crucial and decisive step for your business. Even getting into a room with the right investors can be a challenge. So, it’s important to understand what it takes to make your business unique relative to the competition.
The senior management team, product, market and business plan are all fundamental steps to being prepared – and there are many factors that have an impact on how investible your business is. By paying close attention to what you can control, you can make your business more attractive for investors and increase your chances for funding.
What does it mean to be an investible business?
Put simply, an investible business is one that presents an attractive proposition to potential investors: it has a scalable business model and will likely generate a significant return on investment for investors.
In addition to growth potential, there are a number of other factors that will influence an investor’s decision to invest in your business or not.
What makes a business investible?
Whilst some businesses can attract investment without ticking all of these boxes, the more you can showcase to investors, the better your chances of securing funding will be. Every investor will have different criteria within their own investment strategy. However, there are five key areas that all investors will analyse when it comes to exploring opportunities. The more boxes you tick, the better chance you stand at securing investment.
1. A growing market with a clear unmet need
Having a great product or service is one thing, but being able to demonstrate an attractive market with a clear unmet need is another. Gaining the insights of key opinion leaders or following Governmental policy drives before you seek investment, will unlock a greater chance of success.
There are a number of factors to consider when ensuring you are targeting the right market and meeting an unmet need. Is the market growing year on year? What is the addressable and obtainable market you are looking at? Are you able to overcome the barriers to entry? Do you understand any regulatory issues in your market, and can you illustrate how you will mitigate them? What have experts in the market said about your product or service? How does your product or service tackle the unmet need?
These are all questions that you should be asking yourself before you seek funding. Demonstrating that your product or service meets an unmet need in a growing market will be a big win for investors and provide your first tick in the box.
2. Have you got the right team?
The management team is one of the most, if not the most critical factor in attracting investment. Ideally, you’ll have at least one team member who has experience of successfully taking a business through the journey of commercialisation with outside investors. They will be capable of navigating the business through the challenges ahead and may have contacts within the industry. Of course, it’s also important that the rest of the team delivers too – and they need to understand the technology, the market, areas for growth and have a shared goal. Potential investors will be looking very closely at the team structure and how each individual fits into it. A single person can be the difference between success and failure so it’s important not to underestimate this.
3. A cohesive business plan and pitch deck
Your business plan and pitch deck provide the perfect opportunity to illustrate to investors how well you know your business, your place in the market and your plans to scale. You’ll use these tools to highlight your grasp of the financial aspects of your business: most importantly, your valuation and how you arrived at that figure. You’ll need to outline what figure you’re asking for, what you’ll use the funding for and what value you’ll deliver for that investment.
In your business plan, it’s important to show the anticipated growth and plans for scaling over the next five years including a detailed technical and commercial development plan.
4. An innovative product and a unique selling point
Investors want to see that you have a unique selling point to create a distinguishing factor over the competitors in the market. A “me too” idea that doesn’t add anything to the market is not going to set investors’ pulses racing. But if you can demonstrate how you’ll set yourself apart from the competition and build on what is already in place, then your opportunity stands a much better chance of attracting funding.
How is your product different from what is currently available in the market? How will you continue to innovate to stay ahead of the curve? Can you demonstrate the differentiating factor of your product? These are the kind of questions that investors will want answered.
At CPI this is one of the most important parts of our investment thesis. CPI looks to support businesses working on innovative products that align with our expertise and strategy. We invest solely in companies who have a focus on sustainability and healthcare, with a goal to improve human health and the health of the planet.
5. Proof of concept
Theory is one thing but can you offer investors something tangible? Being able to demonstrate the feasibility of your product or idea will give you a great advantage when it comes to seeking investment. How you’re able to do this depends on the technology, but it could be:
- Early results from testing to validate safety or efficacy.
- Early conversations with large corporates or potential customers who have given validation of the work that has been completed.
- Grant work that has provided data to prove the feasibility and validity of the technology.
- Attendance on a credible accelerator programme.
- Early funding from dilutive sources such as venture capital or angel investors.
Talk to CPI Enterprises
If you’re seeking investment for your innovative SME but need support or guidance, or you’re looking to invest or co-invest in early-stage deep tech businesses, please contact the Enterprises team, CPI’s investor and ventures engagement arm.
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