Every business has different funding needs - there's no one-size-fits-all solution - and gaining funding from investors is the dream for many startups. Generally this means gaining funding in return for giving away a percentage of equity in your business. Here's how James Noble, the co-founder behind startup MyFirstUK, went about the process of winning equity funding.
MyFirstUK is a young drivers insurance brokers that targets the 17-30 year old age range, particularly 17-19 year olds. We guide customers through the process of getting insured by giving the necessary advice and guideance. We are currently creating a telematics solution alongside TrakGlobal to record our policyholders' driving styles to reduce premiums and incentivise safe driving. We are creating an app which will visually show the driver their scores on different parameters such as acceleration, cornering and breaking. The app will also offer safe drivers rewards, which include tickets, vouchers, food and cash.
What made you decide you wanted to go for equity funding over other ways?
Both me and my director had a pretty strong network of contacts which we could reach out to with our video and business plan, which allowed us to get our brand in front of the right people. This then allowed us to use their networks, as they were more than happy to forward the content onto others.
Going into the process, what were your non-negotiables?
At first we didn't want to give away any more than 20% of our equity - however, we were open to terms alongside the equity. Depending on the type of investor, we were flexible on the amount of equity we were willing to give away, such as whether they were a silent or active investor. An active and enthusiastic investor specializing in our not-so-strong fields increased the range we were willing to give away - we thought it would be a good trade in order to get more expertise alongside the funding.
How did you prepare for the pitches?
We created a slideshow presentation and Excel documents similar to our business plan, containing all relevant business information and financials. We also brainstormed all potential questions an investor could ask with positive, informative answers.
How did you decide on the offers best for you?
We researched each investor and brainstormed his/hers area of expertise and how that could aid our improvement. For each offer we also evaluated whether it would be worth giving away extra equity in return for gaining an asset to the team. It's not all about the cash - investors need to also be on board with your vision.
What has been your experience of working with investors so far?
Great! Everyone has expertise in different fields and so are able to advise us on most aspects of the business ranging from marketing to finance. They’ve had multiple years more experience in business, so we can really gain from their knowledge.
Any tips for entrepreneurs looking to secure equity funding?
Our advice would be to meet as many people as possible. You might not get investment or even an offer from everyone, but you will become slicker in your ability to present and even get asked questions you hadn’t previously thought about, which can improve your business.
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