When it comes to securing angel investor funding for your business or startup, making the best impression possible during a high-pressure pitch is vital. Despite Small Business Minister Margot James’ recent announcement of a new, £40 million ‘entrepreneur fund’ to help support rapid business growth, securing angel investment is still by far the best way to scale up fast. But if this sounds like you, are you focusing your energy on the right things that investors really care about?
Our new poll, published today, suggests there’s a big gap between what business owners and entrepreneurs think investors want to know, and what actually matters to the investors themselves. We asked 3,000 Company Check users what they thought investors cared about most when deciding whether or not to invest in a business. Then we asked a group of successful, angel investors the same question. The results we got back were really surprising.
More than a third of the 3,000 people we asked, that’s 38%, thought the business plan would be paramount to the angels and dragons. That was followed not far behind, unsurprisingly, by the 27% who said sales figures. Just 15% thought the founder would be the deciding factor, while 9% said the idea and 8% said the economy.
The difference between entrepreneurs and investors
So how did those stats stack up against our investors; a group of high-profile investors; proven angels who, between them, have invested in dozens of early stage firms. In short, it suggests that the people with the money looking to invest think very differently indeed.
“Having invested in about 15 early stage companies – and seen some failures – my ranking would be founder, idea, then business plan; especially the technology, is it scalable or will it require substantial re-investment.”
This view was echoed by Neil Austin, the former head of global markets at KPMG and serial investor. He also felt that the idea itself, and the personality of the founder presenting that idea always takes precedent over the business plan:
“If I’m the main investor in a venture then I would be looking at the idea, the founder and the business plan, but the founder would be the most important. However If I’m investing alongside others and they’ve been there longer and invested more, the plan would still be number one.”
While multi-millionaire investor Alfie Best, chairman of Wyldecrest Parks, felt that sales, or more specifically cash flow, was always king. That was closely followed, he said, by the experience of the founder and their background.
“When I invest in an established business, cash flow is the most crucial factor in my decision. Also, confirmed sales orders come just alongside it. However, if I’m considering an investment in a brand new business then the experience of the person heading it up and any other companies already on board to purchase their products are the aspects I evaluate first.”
Understanding how to impress the investor
Of course no two investors are the same, but the results we found suggest some striking similarities between them in terms of what matters most to them in a pitch situation. The founder, and their idea, were repeatedly chosen above the business plan; the direct opposite to the results of our poll.
The survey was carried out on the Company Check website during August and September. Our users represent a cross-section of the UK’s business community, including owner-managers, senior staff and entrepreneurs, many of whom are likely to have either pitched for investment in the past or want to pitch at some point in the future. That’s why it’s so important for them to better understand exactly how to impress investors best.
“The findings are really surprising because for most startup investors (at an early stage) that I know, it’s all about the founder and the idea first, then the business plan and sales figures later. This just shows the need for good communication between investors and the people who are trying to secure their backing. That way, more promising young startups can get off the ground.”
Alastair Campbell, founder of Company Check
All figures, unless otherwise stated, have been gathered through Company Check. Total sample size was 3,000 visitors to https://companycheck.co.uk/. Survey was carried out online between August 19th-September 14th 2016. Figures rounded down to nearest percentage point. Full breakdown of results available on request.