The current global climate is changing investor behaviour, and although it’s too early to determine the full economic impact of COVID-19, it will play a significant role in the future of your business growth. Discover how to gain investor confidence in these uncertain times so you can continue to focus on developing your business.
Sadly, in the coming months, many companies will struggle to stay afloat, and therefore previous revenue forecasts will no longer be accurate. This presents a significant risk for investors who, despite having a pool of funds available, will naturally be far more cautious in deploying those funds.
Many private investors are also more risk-averse at the moment and are therefore keeping their cash close to hand instead of investing. It could also be that investors may have a preference for investing in public assets over private businesses during the crisis so that they benefit from access to liquidity.
With investors being more cautious and questions over the future of the economy, there are three key factors you’ll need to consider to engage today’s investor with confidence.
Investors want to see a return on their investment — and revenue growth is typically the most reliable indicator of your business’ forecast value. Given the current economic uncertainty, being able to provide evidence of stable and growing revenue has never been more crucial to potential investors.
As a result, investors will want to see evidence of existing and forecast revenue growth, as well as the likelihood of your business achieving that revenue growth. This will depend on a number of factors, such as whether your business is scaling within an existing market (considered low risk), or entering a new market (considered higher risk).
If your business is pre-revenue, investors will want to assess the size of the market you’re targeting, the competition, why your business’ product or service is unique, and ultimately how much market share you’re likely to capture in revenue terms.
In the current environment, it’s important to account for today’s trends. During Innovate Finance’s recent webinar, Yusuf Ozdalga, Partner at QED Investors emphasised that ‘cash is king’. While we don’t know what the future holds, cash is more valuable now than it was 6 months ago. Your business must take this into account when seeking new investment.
Investor relations are also key. Yusuf also highlighted that ‘Whether it’s existing investors or new investors, or investors you’ve known a long time, now is a good time to build on and leverage the relationships you have.’
Listen to the full webinar, ‘How to Fundraise in Uncertain Times’ to learn more about the key trends impacting fundraising and investor relations.
All crises present a few exceptional investment opportunities that provide significant return opportunities. If your business can offer this, highlight it from the outset. Ultimately the more informed and prepared you are, the more likely an investor will be willing to partner with you.
If you’re serious about getting an investor on-board, you should always be ready to give them the facts and provide the correct information and documentation on demand. This should include an accurate and up-to-date valuation of your business in light of the current market.
Transparency and efficiency are even more important in today’s climate, as investors want added reassurance that their investment is in safe hands
Globacap’s digitised fundraising platform removes the complexity of the traditional fundraising process, allowing you to present all documentation in a digestible format, all in one place, and provide complete visibility across the entire capital raise — reassuring investors and putting you in control.
Our cap table management tool allows you to maintain and display an accurate cap table that’s updated in real-time, reassuring investors that allocations are being maintained accurately.
Click here to learn more and discover how we can help you engage investors with confidence.
People respond differently in times of crisis — and different investors are comfortable with different levels of risk. Therefore, it would be unwise to put all of your time in one investor if there are multiple fundraising opportunities available to you.
Hiring a good advisor with a wide reach of investors is well worthwhile, especially during this uncertain time, giving you the opportunity to consider multiple fundraising options for a greater chance of success.
If possible, try tapping into an existing shareholder’s network too, as it’s easier to establish rapport and build good investor relations when there’s a mutual connection.
Overall, it’s worth exploring all possible avenues when it comes to securing your next investment — and try to avoid putting all of your eggs in one basket.
Related Read: A Startup’s Guide to Investor Relations
Although today’s global climate presents an unprecedented challenge, fortunately, there are steps you can take to engage investors with confidence and continue growing your business.
This article contains just a few of our tips for engaging today’s investor with confidence. To find out more, we’ve created a checklist to help you ensure your business ticks the boxes of today’s investor at this uncertain time.
Completing the checklist means you are well-positioned to secure the critical funding needed to drive your business growth forward.
Download the checklist to start engaging investors with confidence today.
Get in touch to see how we can streamline your fundraising or cap table management.
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Get the Money: Getting Your Finances ready for the Investor Pitch
11 June 2020
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