One of the biggest obstacles every entrepreneur faces is raising investment. The process is rarely easy, even for veteran founders; and a successful outcome is so important for the upward trajectory of a business. A growing awareness of this has created a market of people offering consultancy services to help businesses raise money. That such a market now exists is evidence that people recognise the importance of not simply raising money, but raising money well.
We spoke to Jessica Dick, co-founder of Five Years Time whose mission is “to support entrepreneurs get the support and funding they need to reach their true potential.” They come highly recommended and have an exemplary track record of helping companies to raise investment well via their online training platform which offers educational content and products for entrepreneurs.
On top of her work at 5YT, Jessica manages a portfolio of investments (around 25 startups) in the fields of cleantech, social impact, healthtech, edtech, B2B and B2C software for impact-focused investment fund Synergy Growth. She is also an active mentor for a number of organisations including Bethnal Green Ventures, Google Launchpad & Entrepreneurial Spark.
What prompted you to set up Five Years Time?
JD: My co-founder and I were doing a lot of mentoring and consulting with early stage founders who wanted to raise or were in the process of raising investment. A lot of the same questions and issues would come up – we realised there was general and repeatable advice that was worth sharing.
We wanted to be able to share this with more founders, over and above those we had the time to physically meet and work with. We also realised that the advice would be more useful if founders could put it into practice and use it straight away to contribute to their fundraising efforts.
What are the most obvious signs that someone isn’t “investment-ready” yet?
JD: If someone is still at idea stage, hasn’t got an MVP or prototype they have tested, or if the founders haven’t spent a good chunk of time researching their market, their customers’ needs and their competition.
In these cases, we generally suggest they take more time to evaluate the opportunity, what solution best suits the problem they are trying to solve, and what a strategy and path to scale (and exit) might look like before thinking about investment any further.
All these have to be articulated clearly to potential investors. So if the entrepreneur is not clear on them, they are not investment-ready.
What are the most common mistakes entrepreneurs make when they are fundraising for the first time?
JD: These can vary, but here are three of the most common:
- They pitch their product or service as the opportunity, rather than themselves and the business. These need to be in line with each other, but are quite different.
- They forget why investors invest. Investors want to make a return on their investment. Founders underestimate the importance of outlining the path towards them getting that return (the exit).
- They get bogged down explaining the technical detail of how their product works, rather than responding to the “so what” – i.e. why anyone should care.
When should someone think about alternative sources of finance instead of looking at investment?
JD: If they are very early-stage, or if they cannot see a path towards the types of returns investors expect (5 to 10 times return within 5 to 8 years). There are plenty of alternatives especially for social impact businesses. I wrote a guide (which people seemed to have found useful) to the six main alternatives on the Five Years Time blog (here).
(I also wrote a post on grants for the Seedtribe blog here).
Your Five Years Time course is about investment-readiness: at what point does it make sense for a founder to do your course?
JD: The optimal time is if they are at a stage where they know they need an injection of cash to take their business to the next level, and have made some progress towards what we call the five minimum requirements.
We also have an ‘investment readiness questionnaire‘ to help founders decide if the course is appropriate to them. We then send them a score and point out what they might want to work on and which course would be right for them.
How long does it take to do the whole online course and what would an entrepreneur gain from doing it?
JD: The course itself is bite-size and to the point. But it’s important that founders digest all the materials and work through the action sheets to ensure they are ready to raise. If a founder is dedicated to the process, but with the understanding that they are also running a business, it shouldn’t take more than four weeks.
At the end of the course, founders will understand the investor mind-set, will have their pitch deck, competitor & market analysis, team presentation and valuation and budget ready. In other words, they will have the elements of an investment proposition that stands up to scrutiny and a story worth listening to! They will also know where to find investors, how to approach them, and how the handle the investment raising process.
You can find out more about Five Years Time and their tools and courses here