Beginners guide to raising equity investment

In 2015, when I started ALL by MAMA, I had no idea about equity investment. Since then, it’s been a learning curve involving many conversations with female founders, hiring investment coaches, being part of accelerators and lots of learning.

What I wish I had in 2015 is somewhere I could go to simply understand what raising investment actually was and how it all worked. 

I found the only way I could get any clarity was to try and find someone I could trust and ask them all the ‘silly’ questions I had, but obviously founders are busy people so that only helped to a certain extent. I felt like I had to learn a lot and quickly if I wanted to raise any investment. 

From speaking to lots of female founders via the ALL by MAMA Network, I know I am not alone in this. So, I’m going to start with helping you understand some of the basics.

What is equity investment?

Equity investment is the exchange of shares in your business for money. 

There are different ways you can raise equity investment.

Here are some of the options:

  • Friends and Family
  • Crowdfunding 
  • Angel Investors
  • Syndicates 
  • Accelerators 
  • Venture Capital

Let’s look at each option.

Friends and Family

Not everyone has access to high net-worth individuals, so this is really only going to apply to you if you do. Don’t forget you can think very broadly about you network – friends and family can mean looking to your professional network and your extended, friends of friend’s network. Basically, anyone you have a connection too. It can be a good starting point if it is available to you. 

Crowdfunding

Working with platforms like Crowdcube to raise equity investment is a good option for businesses with an element of community or B2C. You will need to bring some capital to the round via angel investors, but it’s a great opportunity to extend your potential raise and meet new investors. 

Angel Investors

An angel investor is a high net-worth individual that is looking to invest in start-ups. The amount and the relationship will vary from person to person. Consider whether you are looking for angel investors that can also act as advisors. Usually, you will bring in a few angel investors to one round at the same time.

Syndicates 

Finding angel investors can be difficult if you are not within investor networks. You can apply to syndicates, like Angel Academe who bring together angels that are interested in similar investment opportunities. You pitch to the syndicate rather than individual angel investors and you could potentially close your round from one syndicate investment.

Accelerators 

An accelerator is an organisation that offers support and / or funding to start ups. Usually, you need to apply and attend an interview and once accepted you will receive mentoring, learning opportunities, access to network and sometimes funding. The accelerator I took part in was called Ignite and included investment of £25,000 via two VCs.

Venture Capital

Venture Capital is suitable for businesses with high growth potential. It’s not right for everyone, and here’s an article that explains why. It can be a good option if you have a tech innovation, for example, that could scale globally. The type of capital can range from seed to expansion. 

Before you consider raising equity investment you should think about:

  • If and why you need the funds
  • Investor and Founder expectations
  • The investor return
  • What you want from investment 
  • What you expect to achieve with the funds
  • How long you expect the money to last and what happens next

Have a question? Use the contact form at gemmawhates.com or email me at gemma@gemmawhates.com 

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