Apr 01st 2021

How to raise investment as an SME

Find out how to raise investment and more about the investment process with FSE Group’s Harriet Saunders

The FSE Group provides tailored funding solutions and support for ambitious and innovative small and medium enterprises (SMEs). They have teams in London, Cornwall, the South East, the East of England, and the Midlands.

Harriet Saunders works as a Fund Executive at The FSE Group. She delivers £40m of debt funding to SMEs as part of the Midlands Engine Investment Fund.

The 0121 podcast was created to shine a light on those who are doing their bit to champion Birmingham. Podcast hosts and co-founders of Electric House, Lee Wilcox and Adam Barrie, interviewed Harriet on an episode.

There are many different structures and types of investment. It can be difficult to understand which phase you fit in as a company when aiming to raise investment, especially for the first time.

Read this article for Harriet’s tips and advice about how to raise investment as an SME, and mistakes you can avoid.

 

THE INVESTMENT APPROACH

The first step to creating an investment proposal is to understand who you’re going to be pitching to. It helps to research them through their website and know what types of information they’re likely to see.

Then, you can begin creating a short, professionally formatted business plan. Make sure you’ve done your research on your numbers, articulate what the money will be used for, and how it’s going to be spent.

“It’s great to have confidence, but you must be honest in your story and communicate your challenges and how you plan to overcome them.”

Don’t allow the fear of making mistakes to restrict you from raising investment, especially if you’re a startup raising investment for the first time. As long as you have a well-formed business plan with sensible milestones and a strong value proposition, any minor mistakes can be rectified:

“If a projection isn’t quite right still, that’s okay! I can talk it through with you.”

 

INVESTING FOR STARTUPS AND MATURE BUSINESSES

Although minor mistakes may be tolerated in investment proposals submitted by a start-up, Harriet maintains that more mature businesses are held to a higher standard in terms of professionalism.

“Get an accountant to make sure there are no silly mistakes with your numbers. If you’re a serious, credible business, your assumptions should be tested and they should make sense.”

Another difference between raising investment as a start-up verses a more mature business is around the sales traction. It’s important to articulate in your proposal how your sales path has been built, and where it’s heading next.

“Start-ups can be like crystal balls; they may not have as clearly formed plans around growth… But raising investment uses skills that are applicable to a business at any stage.”

 

THE PITFALLS

Harriet says that a mistake often made when trying to raise investment, especially for the first time, is that the milestones can often seem unrealistic.

“I’ve never met an unenthusiastic entrepreneur. This excitement sometimes translates into being overoptimistic… Make sure any assumptions you have are achievable.”

Thankfully, there is a multitude of resources available to support entrepreneurs trying to raise investment, beginning with your colleagues and associates:

“Network and seek advice. Find people who have been in the business longer than you and lean on them for support; they’ve already made the mistakes.”

 

WHERE TO FIND RESOURCES

Alongside the FSE Group, Harriet signposts three main areas from where Brummie SMEs can access financial support:

Birmingham Growth hub is a free-to-contact government service that provides financial support to businesses older than 12 months. They provide SMEs with free events, business advisors, and funding options.

Birmingham Enterprise Community offers programmes that equip entrepreneurs and businesses with the knowledge, skills, resources, and opportunities they need to grow and move forward.

UK banks can offer a range of non-financial services including accelerators and free-to-join programs. Harriet says that some banks will signpost you on to sector-specific programmes or other people in the region who can help.

“Most of the time, it’s about knowing someone in the ecosystem to plug you in… Reach out to the support communities. If they can’t help you, ask them to direct you to someone who can. Keep pushing.”

 

IN CONCLUSION

The investment process can seem like a daunting one, especially if you’re a start-up business trying to raise investment for the first time. 

It can be difficult to know where to start, but understanding and using the resources available to your business will quickly point you in the right direction, provide sector-specific advice, and even assist you in securing your investment.

The key to securing investment for any business is a well-formed business plan with sensible milestones and a strong value proposition. Plan effectively, communicate clearly, and plug yourself into the business ecosystem.

 

Listen to the full episode on Apple Podcasts here.

Find out how to support local independent businesses with our previous podcast guest here.

Find out about our guest appearance on the Mad Influence podcast here.

 

All quotes from Harriet Saunders have been taken and edited from episode 7 of the 0121 podcast