With the recent launch of the long-awaited £120m North East Fund, and subsequent announcements on the fund managers who have been given responsibility for investing its different constituent parts, the race is on for businesses across the region to be among the first to access investment capital from it.
The Fund has been designed to support over 600 North East businesses and create around 3,500 jobs across the region, with each of the funds of which it is comprised focussing on a specific part of the business community, from seed capital and early stage businesses through to well-established firms that want to take their operations to the next level.
Each fund manager is going to want to make a fast start on building their new portfolio of investee firms, and it’s reasonable to expect that they’re going to get a lot of enquiries and business plans to choose from over the next few months.
So if you’re thinking about being one of these applicants, what do you need to do to stand out from the crowd, to make yourself and your business as attractive an investment proposition as possible and to ensure you’re fully ‘investment ready’ when the fund manager comes calling?
The calibre of the people within your business should be the first thing you look at, which means both the management team that will be driving the implementation of the business plan in which you’re looking for an investment, and the workforce that will deliver it on a day-to-day basis.
Yours and your management team’s track record will also play a big part in weighing up the likelihood of success. Can you show that your people and/or business have achieved their commercial objectives in the past, that this experience is going to be used to make similar success more likely in your next venture and that you’re in the right shape to make this happen?
Do they have the collective credibility, knowledge, skills and determination to turn what’s on paper into something more tangible?
How will they do this, how will venture capital involvement make success more likely, what new tools or ideas do you think you need, and are there any gaps in your team that you should be looking to fill?
The strength and extent of the competition you’re facing also makes a big difference, especially if you’re going up against a well-established or highly-regarded rival – how you are going to compete successfully against them, and what makes you stand out from their other potential rivals?
Having a credible narrative business plan in place should go without saying, and should present a clear growth strategy which defines the market opportunity, identifies how your product and/or service will address it, and offers realistic costs for delivering the plan you’re promising.
It’s essential that you have robust financial plans and forecasts in place which dovetail with the way forward that you’re laying out.
As any of the entrepreneurs on Dragons’ Den would tell you, if the numbers don’t stack up, they’re not going to be interested in the story, however good it is, and it’s an area where we spend a lot of time working with clients to draw out all the detail that’s required.
Our experience of helping dozens of North East firms attract investment capital tells us that the more detailed planning, preparation and research you do, and the more expert support you have in developing, refining and delivering your investment case, the more likely you are to succeed.
With a fresh tranche of investment capital now available to the North East business community, and a real willingness to see it begin to reach its constituent companies sooner rather than later, there’s a real opportunity for ambitious firms to be getting on with bringing in the capital they need to grow, develop and create jobs in the years to come.
RMT provides the full range of financial and business advisory services through its accountancy, corporate finance, specialist tax, healthcare, information technology and recovery & insolvency teams, and works with firms of all sizes both within and outside the North East.
By Michael Cantwell, head of Corporate Finance at RMT Accountants & Business Advisors