What we learnt from raising over £10m

Bink
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For most startups, securing sufficient seed capital will be the determining factor behind whether they survive their first few months, and indeed years, in the business world or become one of the 55% which fail before the five-year mark.

Getting ahead of the competition is no easy feat – it is a time consuming, often frustrating and an absorbing process. So, how does a fledgling business position itself in front of investors and stand out from the crowd?

At Bink we started with a friends and family round, after the founders put money into the business to enable proof of concept, raising over £1m from approximately 60 investors. This enabled Bink to be further developed, with a focus to building the app.

Additional fundraising to continue growth and increase the team along with a strategic roadmap was paramount. In total over £9.5m has been raised over three tranches with each round increasing the valuation of the company.

Here are some tips for how you can weather the funding storm in 2017, starting with a

Utilising UK government tax breaks

The Seed Enterprise Investment Scheme (SEIS) is a total necessity for fledgling businesses. Even more established businesses that have weathered a couple of years of trading and are looking for a second round of funding need to be attractive, commercially viable and offer Enterprise Investment Scheme (EIS) tax reliefs as part of their fund raise.

These incentives from HMRC are among the best in the world and have kick-started several prominent businesses. With SEIS a high-net-worth investor potentially has 100% protection from the company failing through efficient tax breaks and even with EIS the potential losses are capped - any startup seeking funding, must register for this!

Capture their imagination

Potential investors will not expect the product or service you are presenting to them to be the finished article. However, you do need to convince them to buy into your vision of what it could become.

For example, we emphasise that Bink is on a journey, and have proven to investors our vision through evidence of our unique offering, successes to date, delivery on KPIs and potential for growth.

It also helps if you can show investors a proof of concept, to let the product’s potential speak for itself. The possibility of producing a near viable product will automatically make the business a more tangible and attractive prospect – remember, a picture speaks a thousand words.

Investors who can truly increase your business’ chance of success will have bought into your vision, and will provide you with a nurturing and advice-based relationship.

Once your product is live, ensure you know your audience when pitching too. On the day Bink went live we were presenting to the CMO of a large luxury London store, who whilst being presented to, downloaded the Bink app and on-boarded himself onto their loyalty scheme. He was amazed that his store was already linked in and he could see his points balance (Bink links in with over 150 loyalty programs already and is then looking to create deeper relationships with retailers).

What can you do to personalise the way you present your product?

Shout about your network

If you have successfully developed professional relationships with leading industry figures or have secured impressive senior hires these are incredibly effective at opening initial meetings as you already have a level of credibility.

This will go a long way to convincing investors that you are a strong contender in the market.

Growth expectations

Ambition is crucial in convincing potential investors to buy into your vision. However, unattainable growth forecasts, built on hopes rather than facts, will not achieve this. Instead, it is crucial to demonstrate that you are predicting uptake of your product or service based on quantifiable data. Ensure it relates to your financial forecast and market trends. Importantly, you cannot assume that your startup’s goods or service is going to change consumer behaviour which your success is based upon.

Alongside financial awareness, investors look for companies whose mission they believe in. With this in mind, it is key to outline what your unique offering is and how it places you at the heart of an accelerating market. USPs come in a variety of forms, from brand new concepts, to different approaches to existing issues and collaborative teams with very top talent.

For us, our unique proposition was based on consumers’ frustrations with traditional loyalty schemes with engagement falling away due to having to carry too many plastic loyalty cards!

Timing has been a factor too, which can sometimes be more luck than judgement. Linking payment to loyalty has been discussed by some of the largest businesses in the world and was previously identified as the number one innovation that consumers in loyalty wanted. Bink delivers this as a world first, supercharging the existing loyalty programs of global brands.

By identifying the more technologically advanced retailers Bink has on-boarded the early adopters who look at being innovative and want to be recognised as putting their customer first. Allowing for free trials when setting out is something to cost into your business model (and subsequent fundraising) as cash burn has hidden costs that aren’t just direct spend.

Sell yourself, not just your product

Although the strength of your product is paramount to securing funding, getting this message across will ultimately rely on your pitching ability. A confident, coherent and well thought out pitch will not only highlight the value of your product, but be seen as an indicator of your competence. Similarly, considered and timely answers to follow-up questions will establish a strong understanding of your industry, all of which are key considerations for a prospective investor.

you cannot assume that your startup’s goods or service is going to change consumer behaviour which your success is based upon.

Remember also to promote the strength of your team. The passion they bring to their job, and understanding their role in your overall business strategy, will be crucial to the day-to-day success of the business. For example, Bob Wigley, chairman of Bink and former chair of Merrill Lynch EMEA was brought on board at an early stage. This gave credibility to not only investors, but also to retail partners that Bink was a serious contender that would look to revolutionise an industry that hasn’t changed in 23 years.

It’s not just about the money

When the success of your business is reliant on securing capital it is easy to be tempted to accept investment with any conditions. Do not allow potential investors to fully dictate terms and be prepared to walk away if you feel that ultimately the relationship is not right.

Investors who can truly increase your business’ chance of success will have bought into your vision, and will provide you with a nurturing and advice-based relationship.

When tackling investment, it is key to take your audience on a journey. Present them with your vision and passion together with how you will get there. Demonstrating your achievements to date, clearly outlining how your company will grow, and selling yourself and your team will be key to this.

Finally, and arguably the most important point, is to remember once you have secured your funding to regularly communicate with your investors and keep them up to speed with events. For Bink we send out a monthly investor newsletter that includes the roadmap and development of the app together with identifying new retailers who are joining the platform and how the future growth plans are doing versus original plans!

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About Greg Gormley

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