Spotlight on fundraising

Fundraising for start-ups or early stage companies has always been a challenging task as anyone who has seen the plucky contestants enter the Dragons’ Den on the hit television programme can agree. However, with a high number of innovative and technology focused companies emerging each year, particularly in the North East, the competition to secure investment is becoming even more challenging.

The North East has an enviable reputation for the development of technology especially in the energy sector and has in recent times placed more emphasis on developing the required infrastructure to help nurture entrepreneurs with their business ideas. That said, securing investment to take an idea to proven concept and then to a profitable and viable business is something that requires more than just luck.

Several factors will determine whether a fundraising process is likely to be successful but four key areas that must be considered are:

• Business Plan – having a clear vision of how to execute your objectives and identifying a realistic timetable and assignation of who is responsible for the deliverables required.
• Funding Requirement – identifying the quantum, nature and timing of the funds that are needed to create a realistic and robust cash flow forecast with built in sensitivities is essential.
• Target Market – knowing who your intended customers, market or sector are that will use your product or service.
• Management Team – establish a credible team to deliver the plan and source outside expertise to fill any skills gaps.

One of the biggest challenges for early stage companies is the ability to demonstrate a commercial return for their product or service. i.e. who, when and how much is someone prepared to invest and will this deliver an attractive return on investment. This is not a case of questioning whether or not the idea is a good one – it’s whether it has the potential to generate a profit.

Thankfully, we are seeing a steady flow of completed fundraising projects and there are many investors currently looking for new opportunities so now is a good time to find the right one.

For more information please contact Brian McMurray (brian.mcmurray@aab.uk) or your usual AAB contact.

To find out more about Brian and the Corporate Finance team, click here.