Event Recap

BFS '18 Talk #4: 10 Quick Tips for Tech Funding

April 9, 2018

With everyone from the government to venture capital firms eager to invest in innovation, tech SMEs have a spectacular array of funding options at their disposal. But while tech is perhaps the most lucrative sector, it’s also constantly evolving, leaving entrepreneurs struggling to keep up with the changes in investor expectations.

For an inside look at what’s happening in tech funding in 2018 and what entrepreneurs need to do to stay ahead, the Business Funding Show 2018 brought together experts with a range of specialisations:

  • Will Fraser-Allen, Deputy Managing Partner at VC firm Albion Capital
  • Rose Lewis, Co-Founder at Collider, an accelerator
  • Peter Dines, Chief Operating Officer and Head of Life Sciences & Biosciences at VC firm Mercia Technologies
  • Tim Sawyer CBE, Chief Investment Officer at government organisation Innovate UK
  • Catherine Young, Owner at Thinkroom, a South African consultancy

Here are some of the takeaways from their panel.

1.  Seek funding at least six months before you’ll need it.

Seeking investment is a time-consuming process. Dines recommends starting as soon as possible.

2. Avoid talking to the ‘wrong investors at the wrong time.’

Only talk to entrepreneurs who are interested in businesses at your current stage, Lewis recommends. There’s no point talking to a late-stage VC firm if you’re an early-stage business with only an idea and a business plan. You may belong in an accelerator instead. The wrong investors may be happy to meet with you just to get a sense of what businesses are out there, but don’t expect to get a deal out of these chats.

3. Preparation is key.

Preparation is the most important thing in fundraising. Time is precious to a venture capitalist, so prepare to use your brief time with them wisely. Also, VCs are data-loving people, so prepare data to support any claims made about your business. If you don’t know how to prepare, seek help. Entrepreneurs have opportunities to receive guidance on raising money, and Fraser-Allen wants them to take that advice seriously.

4. Before you seek investment, look into grants.

If you’re not certain your business is ready for investment, consider applying for grants from Innovate UK, recommends Sawyer. If you don’t have cashflows ready but know your idea is genuinely innovative and want some help bringing it to life, Innovate UK may be able to help you.

5. If you already have grants but need a final push, consider Innovate UK’s new soft loans.

Innovate UK is now offering loans for up to 10 years at about 3.7% interest. This can be a great resource for a company still perfecting their tech before entering the investment market.

6. Submit grant applications to the right competition - and by the right deadline!

While Innovate UK competitions have become more open in recent years, SMEs still need to apply only during the competition windows that make sense for their sector. They must also prepare far enough in advance that they can make it through the ‘arduous’ application process before the deadline.

7. Some sectors are especially hot right now...

Artificial intelligence, healthtech, data analytics, and gaming were singled out as those of particular interest to the panelists.

8. … while some formerly hot sectors are dying down.

Those mentioned were e-commerce, some fintech, and traditional ad tech. In general, tech that relies on certain organisations, such as banks or large corporations, to sell its products is less fundable.

9. Your tech doesn’t have to be trendy to get an Innovate UK grant.

‘If you’ve got a bloody good idea, it’s still a bloody good idea’ even if it isn’t in one of the trendier tech sectors, says Sawyer.

10. Above all, it’s the business model that matters to investors.

‘Having a clearly articulated business model is probably the most important thing’ in securing funding, says Dines. Focus on conveying what’s great about your product, your team, your market, and your unique selling points, and have a realistic funding strategy. These aspects are ‘much more important’ than many of the trends.

It often seems that trends come and go more quickly in tech than in any other sector, but the basics of being investment-ready have not changed. To stay ahead of the curve, keep one finger on the pulse, focus on your tech and its business, and reap the benefits of the business finance industry’s determination to find the next big thing in tech.

Stay tuned for more coverage of our full day of panels and talks to get expert advice on making the most of intellectual property, choosing the right investor, securing grant funding, and more.

The Business Funding Show began as the first exhibition in the UK and EU focused exclusively on business finance. Today, in addition to the flagship exhibition, BFS runs a series of events throughout the year aiming to educate entrepreneurs on different aspects of business finance and connect them with top funders.

To attend other exciting BFS events, such as funding exhibition, workshops, and networking parties and secure your tickets, visit bizfundingclub.com/events.

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