13 October 2015
How do you secure funding for your business?
At an event with North West Business Insider today, I was intrigued to hear the thoughts of a panel of businesspeople about funding. Where do you find it? How easy is it to secure? How does Manchester compare to London in terms of investors?
One question I had hoped to hear a little more about was the question around the necessity of funding. In my opinion, you shouldn’t take on funding until it is necessary – or, in fact – until you don’t desperately need it.
Whilst I am by no means an expert in every industry and there are times when a cash injection is essential, for a growing business, I value building something from the ground up – living off cereal, not having the best office, or good-looking chairs until you can afford to buy them with money you have generated. UKFast didn’t begin in a 50,000sq ft plush campus, the business started life in the back bedroom of a flat on Oxford Rd in Manchester. After several other offices, we finally took the step to buy UKFast Campus a couple of years ago, once we were in a position to. I’m not sure we’d be in the position we are in today had we not have made those choices to be frugal in the early days.
I’ve attended a few events recently were budding entrepreneurs have pitched ‘Dragons Den’ style and have been looking to conquer the ‘dragons’ and secure investments of huge amounts of money to start a business that is just at concept stage. I often worry that this is fast becoming a trend in business and question how well a business can grow when it starts life so far in the red.
That’s why I was delighted to hear one of the answers from the panel at the event. Having been asked about his journey to securing funding, Simon Smith, CEO of video game developers Thumb Food said something that struck a chord. Rather than aggressively seeking funding, he said that they’re instead seeking customers to pay for their services and raise the funds that way. They’re not focussed on funding, they’re focussed on making money.
What a fantastic attitude!
The best time to take on investment is when people come to you with offers, rather than you going to them with needs. Get yourself into a position where you have a strong cash flow, you have something to show for their investment, and you’ll get much better rates and have significantly better prospects for securing investment.
What do you think, are businesses looking for funding too soon? Is the situation different for different industries? I would love to hear your thoughts and stories.
It was also interesting that – especially on Ada Lovelace Day – none of the 18–strong lineup of speakers were female. I hope that this time next year, we see many more females take to the stage. There are plenty of them in Manchester and the North, we just need to shout about them as much as we do the male business successes!