Thanks to Ned Dorbin, Head of Investment for the South West, at BGF for sharing his top tips for securing funding.

So, you’ve got your big idea. Your business is gaining momentum and you’ve got big plans for the future. 

But big plans cost money. Whether it be to increase your sales and marketing budget, improve infrastructure and operations or recruit more talent and experience to the team, without funding, your organisation may struggle to reach that next all-important stage of growth. 

The process of securing funding for your business is not always a straightforward one. There are numerous factors to consider to be in the strongest position possible when pitching your business to investors.

At BGF, we’re dedicated to supporting growth and value creation in entrepreneurial companies, always with a minority share in the business. Since 2011 we’ve invested £500 million into businesses across the South West, a large amount of which has gone into technology businesses such as fast growth connected vehicle technology company, Lightfoot. 

Following BGF’s investment, Lightfoot experienced significant growth from £3 million revenue in 2018 to over £11 million in 2021. The number of fleet vehicles using its technology also grew from 14,000 to nearly 50,000.

Because of BGF’s vast experience investing in scaling technology businesses, we have detailed understanding of what we and other investors will be looking for when investing. 

Here are some top tips for tech businesses looking for funding to reach the next stage of growth.

1 - Know what funding you need

Depending on the type of tech scale-up and where you are on your journey, different funding options will be more appealing than others. 

There are many potential options available for businesses in the earlier stages of their evolution. For example, government grants or crowdfunding. 

One option is to secure growth capital from investors who will not only provide a financial boost but will likely have vast experience within the sector, and will be able to provide counsel and expertise for a scale-up looking to grow. 

Unlike many other investors, BGF is a minority, non-controlling investor. Our equity stake is typically between 10-40%. We believe that entrepreneurs and management teams should be empowered to execute the growth plans for their businesses. Our role is to provide the funding, expertise and support they need to realise their potential.

Regardless of which type of funding you go for, it’s vital that you’re aware of your options and secure investment that fits with your business ethos and goals. 

2 - Be clear about your plans

It may seem obvious, but being clear about your business plan when meeting with an investor is a simple, but crucial first step to securing investment. 

Firstly, this is your opportunity to lay out all the details an investor should know about your business and highlight to them why they should invest in you. A concise, well thought out plan will demonstrate the investment opportunity for the investor, and should include revenue potential, business ethos and vision, competitors and market opportunity. 

Secondly, this is your opportunity to demonstrate your professionalism and skill set. An investor won’t just be looking at the business, they need to have confidence in the leadership team too. 

If you can show your understanding of your business and the sector you operate in, be keen to answer any questions an investor has and address any concerns or opportunities currently within your business, this will inspire confidence and improve your chances of securing funding. 

3 - Assemble a strong team

Having a strong team already in the business is an important factor that investors will consider when deciding whether to invest. Of course, investors know that attracting talent improves as a business grows, so they won’t be expecting every role to be filled just yet.  However, having the structure of a strong team and knowing where the gaps are should be a priority for a tech scale-up looking for funding. 

It’s important to have a mix of skills, experience, expertise and diversity throughout your team. This will indicate to an investor that your business is set up for success and will be in a strong position to fulfil its goals, providing a return on their investment. 

If you have identified gaps in knowledge or skills within your team, be open about this with a potential investor. Not only will this show to them that you’re able to highlight opportunities within your business, but it can also provide an investor with the chance to add value to a potential investment by utilising their existing network of talent to aid recruitment for various roles. 

4 - Know your market

The technology industry is an ever-changing environment. New trends are constantly evolving, and with that brings new opportunities. 

Whilst a technology-focused investor will have a strong knowledge of the challenges and innovations facing the sector, it’s vital that the CEO of a tech scale-up can demonstrate they have their finger on the pulse when it comes to the market they operate in. 

This is important for numerous reasons. When interacting with an investor, either in a pitch or in day-to-day conversation, being able to speak with confidence around new technology trends or issues will demonstrate to them they would be investing in a business leader who is proactive, aware and engaged with the business. 

5 - Understanding what sets you apart

It shouldn’t be an uphill struggle for a potential investor to see what makes your scale-up stand out from the crowd. You should be able to clearly and precisely explain why customers would choose you over a competitor, and what makes your business special. This will demonstrate that you have a clear idea of the market you operate in, and you have a clear idea of your future growth strategy. 

Securing funding can be transformational for a scaling business. When approaching funding, it’s important to be aware of what your business needs, and how working with an investor may add value to your growth goals. 

Finally, you need to prove you are on the ball with the challenges and opportunities within the wider sector. If you can show your tech scale-up is an attractive proposition, and you and your team have a clear strategy and passion for the business, you will be in a strong position to secure funding.