A new scheme designed to create ongoing communication between early-stage ventures and their potential investors has been launched by the Sussex Innovation Centre. The Lean Investment Platform is intended to provide much-needed investor feedback for businesses that will at some stage require funds to achieve long-term growth, but cannot yet be considered ‘investment ready’.
Under the scheme, companies that may have an exciting new idea – but are yet to finalise aspects of the business model – can pitch that idea to experienced investors in a ‘no pressure’ environment and receive feedback on steps they will need to take in order to make the concept investable in the future. Armed with this information, it is hoped that companies will be able to tailor their strategy and make decisions about the path the business will take, based on a clear set of goals. In return, investors get an insight into the emerging pipeline of projects that the Centre’s members are currently working on, and can choose to work closely with those they feel could have real potential.
The programme is supported via a closed group on the investor platform Gust, and with a regular series of pitching events hosted by the Centre. It is made clear to all parties at these events that the primary aim is not necessarily an offer of investment, but feedback, guidance and insight. As such, companies are encouraged to discuss their current needs openly and honestly, without feeling that this will be their only chance to make a good impression.
The first pitching event was held on 18th June, and saw seven companies, at various stages of their development, presenting to the investors’ panel. Reactions to the event on both sides of the table were hugely positive.
"It was a great opportunity to learn about some companies at the earliest stages, and hopefully to give useful feedback on what investors are looking for – and pitfalls to avoid," said Mandy Hutchison, an Investment Manager and partner at M&M Hutchison.
"It was great for us to have the opportunity to present our fledgling business to a room of very clued up people, and give them an insight into where we are and how we may be looking to progress," said Alex Georgiou of Espresso Mushroom, one of the companies pitching at the event.
The new approach to pitching for investment is already bearing fruit; one opportunity that was showcased at the June event has been pledged £74,000 of investment to date, while at least five others have established mentoring relationships with one or more of the investors present.
"Pitching too late may mean that you run out of money before receiving investment," said David Porter, who is managing the Lean Investment programme on behalf of the Centre. "It is rare for a company to receive equity funds within 3 months of starting to look for it; count on 6-12 months. If you are offered investment, you may find yourself with a less attractive deal if you are in a tighter financial situation.
"Conversely, if you pitch for investment too early you may show yourself to be unprepared, and in the wrong circumstances that can put an investor off for good. One way of engaging very early with investors is to set their expectations and be clear about where you are in terms of your preparedness. That’s the principle behind the Lean Investment Platform."
If you're interested in finding out more about the Lean Investment Platform, email David to hear how you can get involved.