How To Make An Investor Worthy Food Business
Many a food business has courted outside investment in order to grow and reach the next level. Developing a small or medium sized business without any help is very difficult, and often the biggest hurdle is having the funds to enact change – though this isn’t the only reason why investors are valuable.
You might be lucky enough to get a random call from someone who is eager to invest in your company, but these opportunities tend to be few and far between. Most food businesses looking for investment need to do everything they can to get in front of the right people and appeal in the best way to grab an investor’s attention.
Here, we look at what your food business needs to appeal to an outside investor and how you can give your brand the best chance of getting picked.
What Your Food Business Needs To Appeal
First, you need to take a look at your food brand and check that you are in a place to appeal to outside investment. A great idea or a complete starter company is unlikely to be enough to convince investors to give you a wedge of funding.
Decide If Angel Investment Or Venture Capital Funding Is Right For You
The two main types of investment to think about in relation to your food business are: Angel Investment and Venture Capital Funds.
Angel Investments are great for small to medium sized businesses, but require that you give up some ownership and control of your business. You can expect to raise £10,000-£750,000 from Angel Investing. This money will, typically, be from serial investors so they’ll have good insights and could help you develop into areas you didn’t expect.
Venture Capital Funding enables ‘private equity stakes in startup and small- to medium-sized enterprises’. The focus here is on early stage funds for businesses. You can raise any amount of money, though larger amounts are not unexpected. It is considered a high risk, high reward investment, so the investors will have an active role in your business, offering advice to ensure you succeed. They profit when you do well so it’s in their best interest to be valuable guiding hands.
Have A Business Development Strategy & Data To Back It
You need to be ready for investment in terms of your business strategy, growth plan, along with data to support your claims. This might sound obvious but it is important to be clear on what investors are looking for in a food businesses.
Your investor may well help you to grow your business, offering advice alongside the cash injection, however, they are only going to work with businesses where there is a clear business development strategy. You need to have figured out what you want to grow and how, and really only be lacking the funds to get there. Market research and sales data is all imperative at this stage.
Have Proof Of Concept & A Healthy Cash Flow
Proof of concept for food business, at the stage where they are seeking investment, can be:
- Online stores
- Market stalls
- Food delivery only kitchens
- Single locations
- Pop-up restaurants
All of these offer real evidence of a demand that your food business can or is meeting, on a scale that can be grown. Pairing this with financials of a stable food business will show you’re on solid ground and worthy of investment.
Money talks and a healthy cash flow will reassure investors that you know what you are doing and able to do it well. If you can achieve this, trimming the fat of spends and refining your costs to the minimum they need to be, it will show investors that you are as good with financials as you are with food.
How To Get Your Food Business In Front Of Investors
Once you’re in the right place and can prove you are an investable food business, then you can start doing the leg-work of getting in front of the right people and making them want to fund your growth.
Online Fundraising Platforms
There are lots of crowdfunding platforms for businesses, sometimes known as equity crowdfunding, which are being used for online fundraising. These exist alongside more traditional investment networks, creating a whole digital marketplace for real, valuable investors to find new projects to get behind.
Whether you choose notable crowdfunding platforms like Indiegogo, a start-up equity crowdfunder like Crowdcube or a more traditional investment platform like Angel Investment Network, you can attract a range of investment amounts. Anything from £10,000 to £500,000 investments are being funded through these sites. You’ll need to do some research to see which is the best fit for your business and goals but this is a great place to start if you want to get in front of new investors.
(Business & Food) Events & Networking
Being visible is key to getting your brand the kind of recognition that makes it appealing to investors. For food businesses there are two avenues: the food one and the business one.
Food events, such as food festivals, are a great way to expand your brand’s offerings, get in front of new customers and potentially get some press attention. All of which is great for investors to see. You might also attend food business networking events where you can speak to other business owners who have attracted investment and can offer introductions or the names of interested parties.
Business networking events can be hugely valuable for developing your business and finding investors. There are numerous events in the UK, with a range of events in London alone. Many will include face-time with investors, a chance to demonstrate products and some will even offer pitch evenings where you can book in your chance to wow investors.
Food Business Incubator Schemes
There are quite a few new and established incubator schemes for food businesses. These schemes are significant because not only will they propel a business by giving you the tools to advance your food brand, you’ll be networking with sector experts. These are the kind of people who know or are investors.
Each food business incubator scheme will differ in complexity, goals and outcomes, as well as what the success stories are so doing your research is paramount. Look for the schemes that best match your business’ growth goals, target market or niche and their offerings.
Ask Investors For Advice, Not Investment
This might seem like an odd one and yes, it is a bit roundabout but it could be just the ticket for your food business. Investors are experts in their fields. They know markets, what a good opportunity looks like, they also know when a business isn’t investment ready. Consider carefully selecting a few investors that you can reach out to for advice. It’s important to be clear that you aren’t cold calling for funds, but rather asking for a little of their time because of their expertise. You can sweeten the deal by offering a tasting or sampling of your food, over which you can pick their brain. The right investors might even make you an offer, at least keep an eye out for your business for when you are ready for investment.
Making an investment worthy business and getting to the stage of actually engaging with funding opportunities is a long game. You might get lucky and find an angel investor who jumps at the chance to get involved with your food brand, but you may also find that you need to do a lot of work to get to the stage where you are an appealing investment opportunity. So get started today!
You can check out more advice for food businesses on our blog.