How to become investment-ready

London is home to ambitious entrepreneurs, innovative businesses and a strong network of investors looking for promising opportunities.

But competition for funding can be tough. The more prepared you are, the better your chances of securing investment on the right terms for your business.

What is investment readiness?

You know your business, its ties to the community and its future potential within London's small business landscape – but your investors don't.

The difference between having a good idea and being investment-ready is your ability to prove what you're saying.

Before you seek out investors, building credibility is crucial – you need to demonstrate that your growth potential is based on experience and research.

Understanding the funding process is also key to getting the right deal for you, as a good investor might bring not just money but also valuable advice that could make your company stronger.

What investors want to see

Investors will expect you to explain your business model, your market opportunity and your plans for growth.

Be prepared to answer questions such as:

• What problem does your business solve?

• Who are your customers?

• How do you make money?

• What makes you different from competitors?

• How will you grow in the future?

You'll also need up-to-date business documents and clear financial records.

Investors want to know that your business is well managed and that you will use any investment effectively.

How to build an investment-ready business

Before investing heavily in new products, services or expansion plans, test your ideas with customers and gather feedback.

Use this insight to demonstrate demand and identify opportunities in the market.

Create a clear growth plan supported by realistic financial forecasts. Make sure you understand the assumptions behind your figures and can explain them with confidence.

Remember that taking on investment often means sharing decision-making and becoming more accountable. Being open to challenge and new perspectives is an important part of the process.

Everyday habits to keep you on track

Get into the habit of checking in on key business metrics regularly.

• Where's the growth coming from?

• How many customers are leaving?

• Are you progressing on your business plans, and are your forecasts changing?

This is good business practice in general but it's also something investors want to see.

Keep documentation of all your milestones and achievements, so you can point to them during the fundraising.

And above all, keep accurate financial records to show that you know where the money is always.

Things to watch out for

Ahead of expansion, it's difficult to know what your company is worth – valuation is in part based on historic earnings, but you also need to take future potential into account.

It might be tempting to hope for the best, but unrealistic valuations will put investors off.

Failing to gather solid evidence of market demand will also be a red flag. 

Wait to approach investors until you have all your documents in order. Make sure you fully understand the potential of your company – investors want evidence, but they want optimism too.

As the leader, you're the one that best understands the opportunity that lies ahead.

When to get support

While you may be good at running your company, preparing financial forecasts and models is probably a job for the professionals.

The same goes for any legal questions that come up during due diligence.

It's worth looking into the different funding routes before accepting money, and this will also help you refine your pitch.

It may be worth looking for an adviser or mentor before starting the process – if this is your first time fundraising, chances are it will be different from anything you've done before. 

Helpful tools

You'll probably already be using a CRM (customer relationship management) system for tracking leads and customer growth, and this data will be valuable as you seek investment.

Financial forecasting software will help you make realistic projections, and data and reporting platforms that pull in raw numbers and flag actionable insights can help back up claims for future growth.

A pitch deck tool will help you make a professional-looking presentation to bring to meetings. 

Ready to take the next step?

Investors want to hear a compelling story about opportunity.

• Are you promoting local London talent and providing valuable services to your community?

• Are you responding to demand to expand and provide goods to more people?

With the vision outlined and interest sparked, you can then prove your claims with the evidence you've gathered. 

Be prepared for a due diligence process where investors ask hard questions – a good investor will find the sore spots and push.

If you have good answers to even the trickiest questions, it's a good sign you are probably ready to seek investors.

While investors are here to earn money, they also want to be part of a success story.

Most investors enjoy the process of growing companies, working with inspiring people, and creating something worthwhile for London and beyond. Get ready to share your vision so people can get excited to join you.

Read more

• Grow London Local Money – explore funding options and build strong financial foundations for your small business

• WEBINAR: What angel investors look for (and mistakes to avoid)

• Understanding business angels and angel investment

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