Can we improve early stage fundraising success by changing how we share and receive investment data?
| Introduction
New and emerging companies looking to succeed have a few core focuses; to enter the market, compete and scale. In most markets, they are competing against established companies with infrastructure and resources. These new companies need to develop their competitive advantage if they want a single shot of surviving - this means creating a great product/service, building a strong team, increasing their reach through marketing/ advertising, hence the need for capital or strong financial support.
Historically there has been a strong correlation between start-up funding and likelihood/magnitude of success.
This case study provides some context of how the Console supplements a companies Fundraising efforts so they too have a higher chance of becoming the next market leader in their space.
| Part One
Building Credibility With Investors
Credibility is a key marker for investors’ estimation of the potential success of a company and their belief in a founder’s ability. It can only be built through action and evidence.
| First Impressions Count
A company has one opportunity to make a first impression with an investor, and it is important to ensure your main contact points are met with professionalism. The Console removes the need for multiple Excel spreadsheets and convoluted research documents, condensing the information into a sophisticated format investors are familiar with.
| Investing In Intelligence And Understanding
At an early stage, investors rely heavily on the competence of a founder and the team’s ability to understand and execute their business strategy. The process of raising capital often reflects this. The Console allows companies to demonstrate a deep understanding of the viability, potential, and limitations of their venture, giving investors confidence in their knowledge and proficiency.
| Effort And Skin In The Game
Investors are exposing themselves to the risk of losing their money when they invest in your company. They are always looking for evidence that the people managing their investment have invested something themselves, as it means they too, have something to lose if they mismanage their funds. While this investment cannot always be purely financial, it can relate to time and personal sacrifice. The Console gives investors confidence that a company or founder has invested in upgrading the fundraising process for themselves and for investors, taking the time to properly convey the opportunity in their business.
https://www.british-business-bank.co.uk/ business-guidance/guidance-articles/ finance/7-ways-to-prove-value-to- investors
| Part Two
Prospect New Investors Effectively
Fundraising is critical to the success of most early-stage companies but is extremely time-intensive. Prospecting efficiently should enable companies to raise capital without compromising the general operation of the business.
| Prepared & Streamlined Stack
Streamlining this process while maintaining detail and flexibility is an advantage the Console brings to a company’s fundraising efforts. A pitch deck and data room should be supplemented by the Console DataPack, although an entry can be sent independently. This provides an investor with everything they need to make an effective decision in one place, on demand, with fewer moving parts that can add confusion and complexity.
| Shorten The Deal Timeline
By providing all the information required to make a buying decision, interaction with investors focuses on yes, no, and ways of working. This removes the long, exhaustive analysis period which usually causes much deliberation and uncertainty, extending the active decision-making timeframe. The Console also allows other investors and professionals to provide additional deliberative reasoning to offer new perspectives and help create a constructive and streamlined decision-making process.
| In-Person Flexibility
Prospecting isn’t always online; it can often be in person. We wanted to remove the difficulty of conveying a business opportunity to someone you meet in person for the first time. The Guest mode allows prospective investors to access their Console information by using a unique code just three clicks away (including the selection of the guest entry portal and disclaimer acceptance). This further removes the need for them to create an account
to access the information, allowing for a more human- centred approach and making a more relaxed interaction more favourable to investors.
According to the investors and founders Sifted spoke to, the whole process of raising seed funding these days — from starting out to getting cash in the bank — usually takes between three and six months.
| Part Three
Communicate The Full Commercial Value Of A Business
Founders and companies know their business better than anyone.They know their value, vision, and potential, but communicating these is the most important part of the fundraising process.
| Data Is A Universal Language
Data is the language of investors, as it helps them estimate the potential financial returns of their investment and quantify the probability of success with a clear understanding of the factors that affect the viability of their analysis. Using a data-driven communication strategy allows companies to communicate effectively with investors and expand their reach beyond traditional sources.
| Closed Feedback Loop
The closed feedback loop created through the Console’s deliberative reasoning feature encourages investors to support you in enhancing your ongoing fundraising by notifying you of any additional information or clarification they want to see. These could also be points of concern for other investors who may not have expressed them. This creates an environment where companies get more effective with their fundraising over time, not less, and they can address uncertainty head-on with prospective investors.
| Short Analysis Means Skipping Value
Early-stage companies are continuously pursuing fundraising. Due to the competitive nature of this market and the finite amount of funding sources, investors often don’t have the capacity to fully evaluate every opportunity they come across. This means confining their analysis time to a manageable rate and depth at first glance, meaning you get one opportunity to attract further analysis. The Console allows companies to clearly demonstrate the true value of their business and its market potential.
Even for entrepreneurs who do gain access to a VC, the odds of securing funding are exceedingly low. Our survey found that for each deal a VC firm eventually closes, the firm considers, on average, 101 opportunities. Twenty-eight of those opportunities will lead to a meeting with management; 10 will be reviewed at a partner meeting; 4.8 will proceed to due diligence; 1.7 will move on to the negotiation of a term sheet with the start-up; and only one will actually be funded. A typical deal takes 83 days to close, and firms reported spending an average of 118 hours on due diligence during that period, making calls to an average of 10 references.
-Harvard business review
https://hbr.org/2021/03/how-venture- capitalists-make-decisions
| Part Four
Access More Investors
The Console provides an opportunity for those raising capital to access additional investors outside of their own outreach by targeting the investors on the platform and in marketing from The Levyne Group.
| Targeted Campaigns
With companies listed on the Console, The Levyne Group runs targeted direct marketing campaigns to prospective investors of companies, industries, and verticals to increase the reach and effectiveness of the platform. This gives companies the opportunity to gain support in their fundraising efforts, allowing them to focus more on their business.
| Network Effects
Companies can also leverage the outreach of other companies as they invite other investors to the platform, thereby gaining exposure to their company. We have engineered the platform to encourage investors to actively interact with companies, provide insights, and contribute to a constructive deal-making environment. We are also increasing engagement by updating investors through email and communication via our mobile app.
According to Dealroom, over the past decade, VC firms have consistently made up between 40-50% of total funding into the UK startup ecosystem. Other sources of VC investment into the UK come from corporates, private equity firms, angel investors, among others. In 2023, 41% of funding came from VC, 39% from other sources, and 20% from corporates.
| Closing Statement
As an investment firm, we wanted to be thorough in our analysis, scalable in our output, and fast in our decision-making, but we couldn’t achieve this with the current tools available and ways of working. That is when we understood the drivers of Venture Capital bottlenecks and the hardship and harm they cause startups.
We started using the Console when we realised the way we shared and received information was broken. It was inefficient, unsustainable, file-heavy, and messy.
The mess causes indecision, and indecision leads to missed opportunities.
The Console didn’t just speed up early- stage investment; it removed what made it slow and brought it up to the speed of good decision-making.
Managing is separate from performant. Performance is the only metric in business.
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