Pitching for Investment?
The KTN’s expert mentor network for CyberASAP has some insider advice for any fledgling business approaching its first investment round.
Now in its fourth year, CyberASAP (Cyber Security Academic Startup Accelerator Programme) helps develop the vital business skills and knowledge needed to commercialise a product or service idea. The culmination of the programme is imminent: the Demo Day on Thursday 18 February sees the final teams demonstrate their cyber security Proofs of Concept to potential investors and commercial collaborators.
A dynamic, online event, 14 teams will pitch their ideas in a bid to progress their commercialisation journeys. For anyone with an interest in spotting early stage talent and ideas in cyber security, this is a must-be-there event.
CyberASAP programme Directors are KTN’s Emma Fadlon and Robin Kennedy who, in addition to sharing their own expertise, also draw on their extensive connections with highly experienced specialist practitioners for further insights.
Here we distil some of those insights from our expert network: investors whose recommendations are applicable to any startup or scale up business looking to raise investment.
If you are looking to spin out in 2021, want to attract investors or secure customers for your early stage technologies, these simple pieces of advice below are tried and tested. Why not use them as a checklist when preparing and reviewing your investment teasers and pitch decks?
CyberASAP Expert Investor Advice:
“Focus on WHAT you can deliver (how will this address the customer need?), and HOW the team will do it, rather than the technology. The technology can come later once you’ve landed the proposition.”
Prof Jordan Giddings, Director, Melioro Group Limited
“Always keep in mind how and what you are going to sell. That means engaging with potential customers early and taking on their feedback, not waiting until you have the perfect product. Without sales, you won’t have a viable business. Think about your cost and then work out your price. If the value doesn’t justify the price, think what your cost should be and how you might achieve that.”
Dr Budgie Dhanda, FCIIS, Managing Director, 3BDA
“The earlier you can get an example/lead commercial client/customer engaged the better. It helps direct development of useful, vs ‘interesting’, solutions and helps give credibility that this will be an enterprise worth investing in.”
Charles Findlay, Southern Angels Investors Club (the new club formed from the merger of Angels5k and Surrey Investors Club)
“Try to find a first investor who understands what you are doing and has relevant experience so can help you…then it will be easier to attract generalist angel investors.
Don’t try to raise too large an investment round, first time. If you do so you may fail to raise, or you may succeed but at the cost of substantial equity, which will be further diluted in later rounds. Think about what value enhancing milestones you expect to reach in the first 12 months and raise enough to reach these and operate for a few months more to allow a margin and time to raise again at an increased valuation.
It will be easier to attract generalist angel investors once you can demonstrate significant commercial engagement. Ideally this would be customers paying full price, but paid pilots are good, especially if accompanied by letters of intent to buy if the pilot meets defined criteria.
Consider participating in further accelerators that can put you into contact with the right customers and/or investors.”
Richard Bednarek, Angel Investor
“Have a clear idea of who the customer is and what their need is (or how are they measured in their role). Also, in a B2B setting, I think it is also crucial to understand who the end-user is within the company.”
Tim McSweeney, Director, Interstate 3x
“When looking for investment, plan early to maximise the amount of traction you have when looking for investment. It’s very difficult to generate meaningful traction at short notice so set up surveys, trials, letters of intent etc. as you can and (if possible) focus on trying to find an early-adopter, even if the use case is a little niche.”
Sean Clayton, Head of Client Operations, Capital Pilot
“Tell me, very clearly, what problem you are solving in the world today; who has this problem right now and what is it worth to them to fix it?”
Ian Robertson, Angel Investor
“Do as much as you can to validate your value proposition before seeking investment. Investors will typically want to see three key areas of validation – product (does the product work?), market (does anyone in the market need it?) and business model (are they willing to pay for it?). Making progress across these three key areas will help position for a successful fundraise, if that is the objective.”
Chris Kilroy, Investment Director, Mercia Asset Management PLC
Thanks to our extended mentor network for their recommendations, which we hope you will find useful. Emma Fadlon also advises that having a clear, validated value proposition – demonstrating that you understand the market and what is truly unique and special about your solution – goes a long way in opening the door to discussions with investors and customers alike.
Good luck with your fundraising!
CyberASAP exists to help provide university teams with the necessary expertise and support to convert their academic ideas into commercial products and services in the cyber security landscape. The programme is funded by the UK Government Department for Digital, Culture, Media and Sport (DCMS) in partnership with Innovate UK and KTN.