Jump Accounting’s Business Development Director, Matt Dangell hosted a webinar in collaboration with Entrepreneur’s Collective on how to navigate your startup’s fundraising journey from Pre-Seed to Series A.
Thank you to all who attended - it was an informative session! For those looking for a recap, or who couldn't make it we've attached a recording and a quick summary of the topics covered in this blog.
The fundraising journey can be complex, especially for first-time founders, so in the webinar, Matt broke it down into a couple of important topics:
Which Fundraising Stage does my business fall into?
Approaching Investors
Pitch Deck – What to include
SEIS & EIS – How Advance Assurance can increase your chances of succeeding in a fundraise
The importance of Financial Forecasts & Valuations
To view the recorded webinar, click here.
Which Fundraising Stage does my business fall into?
Pre-Seed: £50k - £250k
Seed: £250k - £1m
Series A, B, C+: £1m +
Approaching investors
No matter how great your idea is, knowing the best way to approach potential investors with your startup is paramount. Here are some good starting points.
1-Page Showcase
Start with a 1-pager - keep it high-level but get the message across in a concise format. Leave them interested but wanting to learn more.
8-10 Slide Pitch Deck
You’ve got their interest – now it’s time to step that up by providing more information about your product or service, your market, and the overall vision of the opportunity at hand.
15-20 Slide Pitch Deck
At this stage, they’re probably very interested in your product or service, so you can go into a lot more detail, especially around the financials.
Pitch Deck Fundamentals
SEIS & EIS Investment – and what you can use it for
Effectively, both the SEIS & EIS schemes act as a safety net for investors, and provide companies with the funding required to expand their business and innovate further. To dive deeper into how to qualify or what you can do with your SEIS/EIS investment, take a look at our Ultimate Guide to SEIS/EIS.
SEIS
Raise up to £250,000.
Offers investors a 50% income tax deduction (and further tax breaks after three years).
EIS
Raise up to £12 million.
Offers investors a 30% income tax deduction (and further tax breaks after three years).
If your company raises funds through either scheme, the capital you receive must be used for ‘qualifying business activity’, which the UK government defines as:
A qualifying trade
Preparing to carry out a qualifying trade (within the next two years)
Research and development (R&D) that’s expected to lead to a qualified trade
And, the money raised must:
Be spent within 2 years of investment
Not to be used to buy all or part of another business
Pose a risk of capital loss for the investor
Be used to grow or develop your business
Financial forecasting
Financial forecasting is imperative for any business looking to go for a funding round.This will be dependent on what stage your business is at, but to calculate your company’s financial forecast, you will need:
Profit & Loss
Estimate Market Size (opportunity)
Unit economics (how much to charge per service/product - what it would cost followed by gross profit)
Overheads (admin costs, labour costs, etc)
EBITDA
Finance cost
Depreciation cost
Profit before tax (if any)
Balance Sheet
Estimate assets & liabilities
This will mostly be made up of Cash & Capital, unless you have tangible or intangible assets
Cashflow statement
This is derived from movement of P&L and balance sheet
Valuations
A valuation report isn't necessarily required for a Pre-Seed investment round, however you might be inclined to produce one for both Seed and Series A to provide you with more assurance when meeting your investors. Below we've listed the other reasons why you'd wish to provide a valuation report.
Why?
Exiting Founder/Co-Founder/Shareholder
Company Acquisition
Fundraising
Methodology:
Relative: Various multiples used, such as P/E (Price to Earnings) or P/B (Price to Book)
Absolute: DCF (Discounted Cashflow)
Sector-Specific: Multiple-related
We hope this brief breakdown gives an overview of the fundraising journey for startups and helps you distinguish what you'll need to approach investors and secure those all-important funds.
Matt followed up the webinar by answering a couple of questions from the attendees.
Q: What should be on the One Pager?
A: This is an opportunity for you to give investors an insight into what you're doing with your business. Keep it high-level, but punchy enough so it will gain their interest. You can slowly feed investors bits of information which are interesting and thought-provoking, you can ensure they'll want to follow-up and have a conversation with you. Try and relate to them - is this a problem they might have seen before? As long as someone can understand what it is your doing, you should just have:
What is your product
How does it solve a problem within the market
How big that market opportunity is
Potential revenues
Q: Is it possible to do a pre-revenue raise & what are the chances of finding an investor in that case?
A: Absolutely, the majority of Pre-Seed & Seed funded businesses are not making revenue, or if they are it's not enough to cover their costs. This is precisely the reason they are going out to find this capital to continue furthering their business.