Outside investment is the holy grail for entrepreneurs seeking a path to high growth. But as with anything that is in high demand, so too is the competition. So how can you stand out, especially if, like many entrepreneurs, you don’t come from a business background and you don’t know how it all works. Emma Sayle, Founder and CEO Killing Kittens, Safedate and Sistr shares some super useful advice:
I went on that journey myself, raising more than £500,000 to expand Killing Kittens, and here are some of the things I learned along the way.
Establish your narrative
No matter what your industry, your business needs to have a narrative that people believe in. Establishing what this is will underpin everything else I’m about to say. A narrative encompasses why your business exists, where it is going – its goal, its team, what it stands for and the problem that it is trying to solve. All of these things need to be believable. It should reflect cultural trends and needs. In other words, when you explain the concept to someone, they should ‘get it.’
When you’ve established a believable narrative, you can look for people who are willing to invest in it. Where you go first depends on what stage your business is at. If you are just starting out and you are still coming up with your prototype, then the most common route is friends and family for their first few hundred or thousand pounds to get you up and running.
The next stage is where it gets more formal with seed or angel investors, or in my case crowdfunding.
Go to the people who already believe in you
Whichever avenue you go down, the key is to go to people who understand the problem that your business is trying to solve. Essentially you are asking them to buy into your story. With a private angel investor, you may get their advice thrown into the deal, which is attractive for many founders. When I was raising my first round of funding for Killing Kittens to expand from events-based business to a networking platform, my team and I decided on the crowdfunding route because we thought, there are no better people invested in what we are trying to achieve than our loyal customer base.
Crowdfunding is a route to validation. If none of your customers want to give you money it means your product is not that good. I knew that with KK, we had a network who believed in our mission for female sexual empowerment. So we offered the chance to our community to invest in this motto.
We smashed our target, achieving 118% of our £500,000 goal. We put our proposition in front of investors of all sizes. They pledged anything from £10 to £50,000. But the one thing they had in common was that they all backed our vision to create experiences that inspire sexual confidence and female expression. For us it was better to have a high number of investors feeling part of the company, than five city types who might tell us what to do.
You shouldn’t need to ask
The crowdfunding model won’t suit every business. So if you do decide to target private angel investors or a seed fund then what I would say is find ones in your sector. Research on Google, LinkedIn, or go and network. Whatever you do the principle is the same – find an investor that has a personal connection with the issue that your business is trying to solve.
Making the first approach can seem daunting but if you have a strong business narrative and you believe in it shouldn’t be. We never had to approach investors because we had enough believers in our narrative who wanted to invest. I’ve heard it be said that if you approach an investor and ask for money, you might get help. If you ask for help, you might get money. So never be afraid to reach out and just ask for input from investors who know your space.
It also helps if you can demonstrate that you reached success while small, before asking for funding to go big. Chances are if you haven’t conquered a small market, funding will not be an elixir. Since launching in 2005, our KK network had built up a user base of 120,000 people by the time we sought investment last year. Our customer base knew that, so they had confidence in us.
Don’t be put off by difficult questions
Finally, it’s worth saying that if you are a woman seeking investment don’t be put off. Earlier this year I was invited to input on a report commissioned by the Treasury which found that for every £1 of venture capital funding, female founders got just 1p. I’ve heard VCs admit that they often don’t take female founders seriously and many women report that they get asked negative questions. I’m passionate about fighting this issue, but until this inequality is addressed my advice is: Don’t let it throw your confidence in your own business. Demonstrate your success, tell your narrative and always know that if you can’t get investment from one person, you know you can take it to your network who believe in you.
About Sistr (https://www.sistrapp.com/)
On Sistr, women gain access to a network of qualified female experts covering a whole range of industries and skills, to help them grow. Sistrs can chat with other Sistrs via the platform on a variety of business and lifestyle topics, attend carefully curated events and choose to work together beyond the platform, building their tribe, creating their own advisory boards or building out a team of female talent to move their businesses and goals forward.