How to raise UK Startup Seed investment 2021/22 tips
Updated: Sep 9
Everyone in the UK says it’s hard to get Seed Investment. The thing is a number of people blamed Covid, but it was becoming difficult before then.
However, if you are smart and on top of today's environment then you have a high chance of closing a pre-seed or seed round.
Good or Bad, I get sent numerous decks weekly and have done since about 2012. They range between dire, arrogant, dreamer, bull shit. Oh and out of maybe 50, 5 will stand out as good. Below is a brief list of things I would suggest you reading right now as a new founder should do who is seeking funding. Or completely ignore my advice which is also your choice. These tips are also something I work through on making investments myself or through Pario Ventures or personal investments.
SEIS/EIS advance assurance - No brainer, sort it out. A lot of people out there get a 70-100k bonus and want the tax benefits of SEIS. SEIS should be the easiest money you ever raise for a number of years.
Bootstrapping impresses investors, but don’t overcook it. Massive respect for people who have properly bootstrapped. However, there is also a fine moment that you cannot keep bootstrapping and need to change your game. It might not be obvious to you but if you have good advice around you they will let you know, or you start losing out on deals or growth because of a lack of funds.
Risking your own money(not just time) impresses good investors - and here is why. They probably did the same as you at some point. They probably had that spare 2k on their credit card and few thousand in the bank and risked it all in this amazing thing they believed in. Not only that it shows real guts and speaks volumes about how far you will go as a founder to build a business.
Don’t try and be a US movie-inspired founder- Yes we have all watched movies with tech founders. And whilst we maybe need a few more Sean Parkers (Napster) in the startup world, the reality is, that it's just a movie, made for enjoyment. Be you, be humble(gets you a long way), know your strengths and beliefs, and listen to people.
If you can get yourself paid and do a startup at the same time then good times - but you will probably be burning the candle, however, I have always said to people it’s better to make tough decisions when your back is not against the wall financially.
As yourself this - If I don’t raise what will I do? If things don’t go to plan?
Don’t use US valuations to value your UK startup - Different markets, different worlds. Yes, maybe when you are scaling but for the majority of you, your valuation for the most part is based in the UK. I see the difference of x5 x10 (and the rest)greater for US valuations but you are not in the US so it's irrelevant. The market will tell you what the market wants to pay right now for investment.
Know your startup and investment Jargon - Link to article here
Look at decks that have ‘actually’ raised money- And I don’t mean a deck from 2000! Find a deck that has been used for the UK fundraise and raised ‘actual’ money. Even better if it is similar to the space you are in.
Know who you are pitching to. If you want someone's 5k,10k, or more then at least spend a few minutes understanding who you pitching and find out something specific about them. The calculation I always did was if I had to spend a total of 3hrs time-wise with that person and I get 10k from them, then that is just over 3k per hour.
Follow up on questions within 24hrs - Don’t reply in a week's time or even worse a month's time with “oh I have been so busy”. Really doesn't look good at all and that person you just sent the email to is probably calling you an idiot.
Value people's time - I say it a lot but throughout this process value people's time. I have seen the smallest token of goodwill for people's time, create a long-term investment of time in return.
Startup Marriage, prepare for divorce - Startups are like a marriage. Most marriages work, have some rough times but figure out and need work. However some marriages fail because it just doesn’t work, no one puts the effort in, and the next thing you know it’s divorce time. That founder you once liked and had beers with, you now cannot stand even seeing an email from them. Invest into your legals to make sure that if Startup Divorce happens it doesn't distract so much, or have the most appalling agreements in place that it destroys your company. Seen it happen, a lot.
Lastly, you need some patience. I am definitely seeing things take longer than 24months ago. Also, don't kid yourself because you don't want to look into the truth about your raise. Life is too short to waste.
Crowdfunding - Didn't put this as a tip. It is more of an FYI. I feel people get the perception that crowdfunding is easier. 1st thing to remember is it's a different type of investor than maybe dealing with an Angel or an EIS fund. It is also expensive to do and takes a lot of effort. Whilst it works for some companies, there are a lot I hear that fail or pull out of platforms. I still think you need some traction to crowdfund properly in most cases.
Some companies I recommend that I have had the pleasure of using or working alongside, that might help you on your journey:-
Seedlegals - They cut a lot of the cost on the foundation side of legal. I still think there is a place for lawyers like Field Fisher(who are great) and Lawyers you meet as part of startup programs.
Vestd - Everyone talks about options but the costs can vary massively. For EMI Stock options, this platform smashes it for me.
Haatch Ventures - They have invested in a few companies I am involved in. Good money, good shareholders.
SFC Capital - Big fans of Startup Funding Club. A really good group of angel investors and SFC are tough on the DD they carry out for investments. Worse case if they DD you and don't do a deal you will have a clear reason why.
Pario Ventures - Bias link here to my own firm.