As the T-DEB journey comes to a close, the T-DEB team at Tekiu has been reflecting on the knowledge gained as part of the journey. As part of the final showcase event in March 2020, companies in the programme will meet investors.
Gaining investment is not an easy task. Our team and our project network have gained many valuable lessons on investment over the years, and through our journey in T-DEB we have refined our understanding of what is needed for our participating companies. In particular, ways to help them find what is right for them.
Over the next few weeks we will be releasing a series of blog posts on the lessons we have learned and sharing them as a resource for future projects and interested companies. We will be exploring the process of securing investment from the pre-exploration phase, through the types of investment available, how to search for investors, how to construct an effective pitch deck, how best to outreach to investors as well as how to meet investors.
But we are actually going to start at the end. This blog contains a useful collection of the most common questions investors ask of companies. Posing these questions to yourself and your company is a good start and serve as thinking points: which ones can you answer confidently and which ones can’t you? If you can’t, what would you need to do to be able to answer it? We will explore when you should be answering these questions and how through this series of blog posts .
- What’s your gross margin/profit margin?
- What is your exit plan? Who would buy you? Have you exited before?
- From the amount of money that you’re asking, how much of that is contingency? What is your cushion margin?
- What’s the return on the equity share going to be and when?
- What is your revenue stream?
- Is the investment amount that you are asking for enough? When would further rounds of funding be? Why then?
- What is the break down of your costs for this investment?
- What kind of costs do your competitors incur on manufacturing, how is yours cheaper?
#OrganisationalCapacity and #CompanyOperations
- What are your operating costs?
- Do you understand the process of licencing your technology?
- Do you have patents? How many? What is their scope – geographic cover?
- What patents do you hold? - If it’s just a trade secret, when are you going to patent it?
- How much would a manufacturer save by implementing your product?
- Where are you in the development stage? How long for you to reach your target turn over?
- Is your production scalable? How? What are your main limitations?
- What approval do you need before you enter the market? How far through are you on obtaining these?
- How far are you with production of the product? (Is this just a concept at the moment or is it in production?)
- If you are a small company, your team is more important than ever (the investor will check your company and team through the human network).
- Have you built companies/startups before? What are your main lessons learned?
- How does the cost of making your product with your system compare to the current production in your target market (country)?
- Who is your primary consumer? How much are they willing to pay for your product or service?
- How does your problem and solution link to the national priority?
- How many customers do you need to break even?
- How big is the need for this solution? (what's going to be your customer base?)
- Why are you restricting yourself to this market and not exploring others?
- Do you have international links, e.g. selling your product in the US or collaborating with a Chinese company?
- Who are your competitors? What is their cutting edge?
- What is the speed at which your competitors operate and what are their operating costs?
- What is novel about your approach? Who else has attempted what you’re doing and why have they failed?
- Why is your product so much cheaper than your competition?
- You have really strong competitors that are well established – your advantage is that you can produce locally and at a lower cost – is this enough?
- What is the market in this sector like already? (competitors and their business models)
- Can your product/solution be replicated? Can another company mimic your product and steal your market?
- What is your business model? How does it compare to that of your competitors?
We suggest taking time to reflect on these questions - some might not apply to you - but they will be useful as we progress in this investment series. In the next blog we will cover the exploration phase pre-investment and what types of investors are out there.
About the authors
Alan Every is Business Development Analyst at Tekiu Ltd.
Dr. Cindy Regalado is the Managing Director of Tekiu Ltd.
Tekiu is a research-intensive organisation dedicated to designing and delivering high-quality, tailored, international fact-finding and technical visits – Discovery Trips – as well as multi-year government programmes for international business partnering and R&D collaborations – Partnering Programmes. We organise Discovery Trips and Partnering Programmes in the fields of health and life sciences, research and innovation systems, social policy, engineering and environmental technology, smart cities, and the digital economy. Discovery Trips and Partnering Programmes enable clients to identify innovation gaps and answer crucial questions that help them thrive and respond to challenges in innovation and strategic planning, market expansion, socio-economic uncertainty, etc. On the basis of our expertise in designing and leading complex programmes, we also provide evaluation services to third parties for national and multinational programmes.