An in-depth survey of tech startups and mentors in the North West reveals that many of the region’s new businesses lack knowledge of how to raise investment, with less than a fifth saying they feel confident doing so.
Findings showed that just 19% of startups felt they had good knowledge or confidence in raising investment at the beginning of the 12-month programme, although this rose to 58% by the end.
More than 50% of startups felt they lacked knowledge and confidence in ‘creating a pitch deck’ and ‘pitching’ at the outset.
The report from Tech Manchester, an organisation set up to support tech startups, details the journey of 86 mentor/startup partnerships within its mentoring programme, measuring levels of confidence and knowledge among startups at the beginning and end of the programme.
Tech Manchester’s mentoring scheme has so far trained hundreds of mentors and facilitated a total of 170 mentor/startup relationships. The organisation is funded by cloud hosting firm UKFast and provides tech-focussed businesses with a host of support initiatives including the mentoring programme, business skills workshops and PR and communications support.
Tech Manchester director Patricia Keating said: “We saw the biggest increases of knowledge and confidence in raising investment and pitching to investors. Speaking from experience, the language around investment can easily exclude people who haven’t encountered it before. We’ve shown that you can have a significant impact with a few lessons on how to approach investment and pitching.
“It’s not about encouraging people to give away a chunk of their business, but rather arming them with the tools and understanding of the different types of funding available and when it’s appropriate to access that funding. It’s about being confident building an investment strategy.”
Additionally, HR was the single weakest knowledge area at the outset of the programme, with startups in the dark about recruiting and people management.
Keating added: “A large proportion of founders have never managed people or been party to HR processes within their previous roles, so it remains the most significant knowledge gap among startups. Through the programme we ran sessions on making a first hire and best practice in recruitment, onboarding and people management, bringing the percentage of startups that were confident in HR from 13% to 45%.”
On completion of the initial cohort, 87% of startup/mentor partnerships plan to continue their relationships beyond the scope of the programme.
Reece Douglas, founder of Social Plug and a mentee in the programme, said: “I didn’t know anything about the different investment pathways when I joined Tech Manchester. The process of getting funding can be expensive and it’s difficult to know who to trust, so it’s critical to have an impartial third party to give advice or recommend others who can help.
“It’s clear that there is a knowledge gap around the different funding options, but being in the mentoring scheme gave me the tools and knowledge to understand exactly the type of investment my business needs to target to move forward.”