This article, exploring venture capitalist investment, continues our series of themed blog posts where we unpick the often complex areas around fundraising and getting investment in your business, and spotlight a few of the organisations and experts who offer guidance and support in this area.
We especially want to thank Piper for the expertise they have shared to support the Hatch community raise funds for their businesses.
What is Venture Capitalist Investment?
A venture capitalist is someone who makes capital investments in businesses in exchange for an equity stake. They will often bring their professional expertise alongside their capital. If you have read our previous post on angel investment you may be wondering what the difference is.
Put simply, venture capital investments tend to be larger amounts to businesses that are slightly further along their growth journey, and the funding comes from a whole venture capital firm that is responsible for the investment rather than an individual using their own money.
The scale of the investment being bigger means more due diligence, more active involvement from the investors, and more pressure to meet the expected outputs and grow the business.
This fundraising route is therefore best suited to a business that is prepared to use this large amount of capital to grow quickly.
The 5 Questions Founders Should be Asking Venture Capitalists:
1️⃣ What is the size of the fund?
2️⃣ What is your typical ticket size?
3️⃣ How much do you save for follow-on rounds?
4️⃣ How many investments do you make a year?
5️⃣ How do you support your portfolio?
These questions will help to inform your fundraising strategy. For entrepreneurs looking to scale sustainably there are also considerations such as where the investment money is coming from, the diversity of the fund’s past portfolios, and the impact on people and planet.
Think the Venture Capitalist Route is for You?
If you’re considering the venture capitalist investment route then make sure you look into the Seed Enterprise Investment Scheme and Enterprise Investment Scheme, explained here by Leon Hughes, partner at Piper Private Equity.
How Do I Get Started?
If you think your business is ready for venture capital investment then we’re here to help you get started. Below are all of the resources you need to start getting your pitch together, and your business investment-ready.
The main things to remember are research, passion, and a strong model. If you can demonstrate all of these in your pitch then you’re well on your way to forming a positive investment partnership.
One thing to be aware of is to be prepared for a long process. The relationship building, pitching, and due diligence can take up to a year, or more.
If you want some direct support around this you can access a 1:1 consultation with an expert from the Hatch community.
Free Venture Capital Checklist
Finding the right fund for you can be a challenge. Check out these resources to find the best fit for you and your business. This list from Beauhurst looks at some of the most active funds over the last ten years.
Commitment to diversity and investment in underrepresented groups is also a key consideration, and in recent years there has been a noticeable commitment to this from some funds.
A sample list of venture capital funds with a commitment to impact and diversity:
- Impact X Capital: London-based venture firm funding the undiscovered, creating the extraordinary, impacting the world.
- 1818 Venture Capital: Invest in founders who create wealth and do good in the world.
- Pink Salt Ventures: Early stage investors in female-led technology companies. We partner with the best entrepreneurs and help them build lasting companies.
- January Ventures: We invest early and open the doors for the founders of the future. We believe venture should be transparent, open and accessible. The chance to build the future should be equal opportunity.
- GOODsoil: We are a venture capital firm that partners with founders to build global, market-defying companies. We fund diverse teams across Sub-Saharan Africa and Europe.
- Pact: An early stage fund backing founders that are solving key issues facing the future generations: democratising access to products and services, advancing personal and professional wellbeing, and solutions for a more sustainable planet.
- SimSan: We are a venture capital firm that invests in diverse-led startups developing frontier technologies with scaled impact.
Remember that you are not alone on this journey. We have supported thousands of founders to scale their enterprises over the past decade and our experienced programmes team is on hand to help you access the right opportunities for you and your business. Whether that’s through our masterclasses, public events, or mentoring, let us know how we can support you.
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