Getting funding can be a make or break for your business
Are you currently fundraising or seeking funds to grow your business? Being investment ready has been a buzz word in the African ecosystem because it can be the difference in getting funder buy-in or closing your business. 95% of businesses fail in the first five years of operation. According to USChamber.com “Entrepreneurs say getting business financing is among their top challenges” and CBInsights says that not having financial backing is a top reason they fail. But what does investment readiness mean?
Investment readiness is not the holy grail to investor swooning, nor does it have a silver bullet to all your business financing nightmares, because there may be as many definitions of it, as there are investors. It will depend on factors such as the product’s industry, the business stage and target market.
It is good to know that some investors may not be start-up investing ready either, as they may not be able to answer these questions for themselves, and maybe that is why you are not raise funding, and not only because you were not investment-ready.
It can mean convincing that you can give 30X return
However, that is a conversation for another day because, despite the uniqueness of each investor’s investment readiness criteria, there are overarching principles. The core of it is simple.
“Before investors make an investment, they need to believe in you and the business and that you will give them multiple returns on their investment”.
Therefore, you need to convincingly demonstrate that your business will grow tremendously because of the investment, and you will make more than enough income to grow the business and pay back the investors their money, many times over. Sometimes 10, 20, 30 times over.
There are keys to unlocking the convincing aspect of investment readiness. Almost like a checklist that investors share (not necessarily amongst each other) that cover the core principles that lead to generating enough interest to discuss details in the deal room.
So we spoke to investors Abu Cassim, the founder of Jozi Angels and Lelemba Phiri, the Principal at Africa Trust Group and asked them what do they look for in an investment. In this video, they shared some keys that you can use to unlock your investment readiness potential, take a look!
As we leave a difficult year and enter 2021, we believe that investment readiness and funding will continue to be an important topic for entrepreneurs, more than ever before. So, we invite you to join us in January 2021 as we delve deeper into this conversation. We will host a webinar with investors and experts in the field which will look at the process of start-up investing and how entrepreneurs can prepare themselves before they approach investors. Details to follow in January 2021.