Road To Investor Readiness.
The Entrepreneur’s Road To Investment
Though entrepreneurship is often challenging, the rewards of success are worth every drop of sweat. A critical key to entrepreneurial success is the ability to scale and attract investment. This needs the entrepreneur to be well prepared and have a defined desired growth path.
Investor readiness involves a clear understanding of one’s market, how their product or service solves a problem and how scalable it is backed by the ability to showcase the same. There is great appetite to fund businesses in Kenya and Africa. To give perspective, according to Tech Crunch, in the first quarter of 2022, Kenyan startups raised over one billion dollars and this only accounts for the deals that are made public. Here are some tips for entrepreneurs seeking funding on how to be investor ready.
- Know Your Business
It is expected that you have an intimate knowledge and understanding of your business. know your products or services, target market, unique sales proposition, and potential for growth. Understand the core functions of the businesses so deeply that you can effectively communicate its value to investors, partners and stakeholders and demonstrate a clear vision for its future. Focus is your friend.
- Develop a Solid Business Plan
A well-written business plan with clear goals, strategies, financial projections, detailed product descriptions, solid market opportunity and a defined competitive landscape is mandatory. An accurate plan is an indication that the entrepreneur is serious and committed to the business. The plan is the foundation of the pitch that will describe the product, the solution, how the investment will be implemented and generate returns for the investor and positively impact the community. Plan for financial success.
- Build A Strong Financial Model
A strong financial model demonstrates that the business is on solid financial ground and there is room to grow. The model must accurately reflect the current financial situation and the growth trajectory including revenue, expenses, and cash flow. Any assumptions made should be clearly explained and realistic with possible mitigation strategies for potential risks. For instance, an investment of 50K in marketing, 200K in product development, and 100K in sales will eventually translate to 65% growth in revenues in the next 2 years plus a reduction in production costs by 30%. Do not be overambitious.
- Assemble a Strong Team
Businesses need experienced and skilled teams to execute the business plan, achieve the set goals thrive and investors know that well. Additionally, a board of advisors is an important element because accountability to others with the right knowledge is evidence that the entrepreneur is committed to growth. Every business must be deliberate about having the right people in position. Remember, a well-rounded team enhances your success.
- Connect to Professional Networks
Networking with other entrepreneurs, investors and business advisors is key to investor readiness. Each of these circles provides insight, guidance and support so be sure to attend industry events, conferences, and socials as well as join at least one local business association. A strong network increases your visibility and credibility.
- Prepare for Due Diligence
Get comfortable with scrutiny. Investors scrutinise everything before putting money down, to truly understand the reality of the business. Be ready to share financial statements, operational plans, and business process maps. Expect background checks on the team and deep market analysis. Be confident about who you are.
- Be Flexible and Responsive
Finally, choose to be flexible and responsive. Investors often ask for additional information or clarification so share it quickly and accurately. Show that you are committed to your business and are willing to make changes to improve it, if necessary.
Investor readiness often feels like hard work but it is made easier with help. Through our Imarisha Service, we craft tailored pathways for our entrepreneurs because no intervention is no one size fits all. We hold your hand as we assess your current position and then chart the path to the final readiness through our extensive network of trainers, mentors and coaches. This personalised support helps the entrepreneur stay focused, persistent and committed until they pitch, receive feedback, adjust and receive the investment.
Upcoming Business Clinic – Go To Market Strategy, 30th March 2023.
Ongoza’s business clinics are part of the ongoing Investor Readiness Series. They are designed to offer in-depth conversations to early and growth-stage entrepreneurs. This is offered through an interactive 3-hour session with our growth partners and investors.
This month’s clinic on Go To Market will involve an info session with an investor who will tackle the topic at hand from an investor’s perspective. We’ll be tackling challenges faced when developing a GTM strategy as well as tips on how to improve and attract investors.
Don’t miss out on this month’s Investor Readiness Series where we’ll be covering Go To Market Strategy, from an investor’s perspective. Click here to register for the clinic taking place on the 30th of March 2023.
