Lessons From Tim Jackson
How To Attract Investors
Recently Raising Partners were at a dinner with Tim Jackson investor, entrepreneur, writer and founder of Lean Investments. Usually making investments of between £10,000 and £500,000 at seed stage, Tim shared his top four things he looks for when considering an investment.
Team – How investable are the team? It’s not about how much experience these individuals have in their field as inexperience in an industry often leads to innovation. It is also very telling if entrepreneurs and their team members are willing to give up their well-paid, salaried jobs in the pursuit of their business. If you aren’t committed and willing to invest in your idea then why should anyone else?
Traction – How far have you got with your business with no investment? Press features and a website don’t cut it, investors want to see tangible results. What sales are you making? If you are building an app then the important thing is your engagement rather than your users. Anyone can download an app but getting people to engage with your product and build a community online is very different.
Market – What is the size of your market? Is it growing and is there enough people in it that you can realistically reach and sell to?
Barriers – What barriers to entry are there for the competition? If you have something that can be copyrighted, patented or trademarked then make sure you have done this. Investors want businesses to be competitive and sustainable on multiple levels not just price and user experience.
It was when discussing barriers that Tim made the observation of why Richard Branson has been so successful building his empire – he has entered highly regulated markets that are notoriously difficult to work in; trains, planes and banking. These industries are also renowned for offering a poor product and service, meaning the Sir Richard’s Virgin empire only has to be a tiny bit better than the competition to attract and retain customers.
Finally, we asked Tim what one thing instantly puts him off a deal. The answer? Being asked to sign an NDA. When you consider the volumes of business plans investors read, it is highly likely that someone at some point in time will be doing something similar to you and signing an NDA makes navigating future investments potentially a legal minefield.
With all the recent hype surrounding successful Crowdcube campaigns, it’s easy to assume that crowdfunding is the easy route to raising investment. Cut through the noise however, and you’ll find that the latest statistics consistently show that 50% of small businesses fail in the first four years. If raising funds were so straightforward, surely these figures would be drastically lower?
With AirBnB set to go public this year, it seems like now is a good time to revisit the accommodation giant’s Pitch Deck from 2008. Fast-forward a decade to 2018 and AirBnB was making over $1 billion dollars in revenue and it’s estimated that this figure will increase to $8.5billion by 2020.
Back in 2008 however, CEO Brian Chesky was projecting a much smaller figure of $200 million by 2011. Their Pitch Deck was convincing enough to raise the investment they needed, and they received over $2 billion dollars in venture funding in a combination of 7 rounds of capital.
Have a read and see what you think!
At Raising Partners, we know the challenges that face every business, regardless of its industry, as well as appreciating the burden of responsibility that an entrepreneur comes up against. The untold truth about entrepreneurship is that it is a balance between many skills and abilities and can, at times, be a numbers game.
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Raising Partners is an innovative investment consultancy which partners with businesses of all sizes to secure investment through angel networks, VCs and crowdfunding.
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