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Tips and tricks for entrepreneurs from OnBuy founder and CEO, Cas Paton: Raising funds
Posted on: 08/02/2021
Raising funds can be the most challenging part of any entrepreneur’s job. If you’re looking to raise capital, you need to not only make sure your business idea is desirable enough to gain investors’ attention, but that what you are pitching them is what they want to hear.
Whether your funds come from business connections, angel investors or venture capital firms, you need to make sure you’re doing the right things to secure the lifeblood of your venture by securing funding.
My biggest challenge when wanting to scale OnBuy.com was finding the right first investor. We needed the investment to elevate the business to the next level but, given the market we are in and our perceived competitors, finding the right fit took time. It was well worth it – with our investors’ backing and support, we’ve achieved over 600% growth for the past three consecutive years.
I also discovered that, as a founder and CEO, my metrics of business success weren’t necessarily what our potential investors were looking for. Understanding what they were looking for at the start of the process would have saved time, and potentially gained results much quicker.
I pitched to Dorset Business Angels back in 2019 and this grabbed the attention of an investor. The opportunity was subsequently referred to fellow Angel investors at the Surrey Investors’ Club, leading to investor backing OnBuy to the sum of £125,000.
By July 2020, we secured £5 million in venture backing as part of our Series A funding round to expand our brand presence and grow the business into 142 countries by year-end 2023. We were one of very few businesses able to secure funding during the pandemic and I think one of the ways we managed to do that was by demonstrating the strength of our business, that it’s pandemic-proof, and by pitching to the right people. Fuel Ventures, a London-based venture capital firm that has invested in OnBuy, invests in technology businesses and therefore speaks our language and has experience with our user bases.
The experience of our Series A round was very different to when I was looking for investment earlier on in OnBuy’s journey; I was pitching to the right people and I knew what they’d be looking to hear. I’m excited to be launching our Series B investment round soon.
Here are my top three tips for entrepreneurs wanting to raise capital:
- Talk to potential investors prior to pitching to better understand what is required. When first pitching for investment, I needed to get my head around what potential investors expected to see. They don’t just want metrics from a sales point of view, they’ll be looking for specific units of economics and to see how those translate into key performance indicators. The minute I understood the investors’ mindsets, OnBuy became much more investible and we had greater interest and investment success.
- Know your numbers and make realistic forecasts. Investors believe in numbers, so make sure you’re showing them. Validate and understand your financial figures and show that you have achieved product or market fit.
Part of the process of understanding what investors were looking for was working with a financial analyst to dive deep into our data and ensure that what we were including in our financial statements would satisfy potential investors.
- Seek advisors, not just investors. There’s so much more to raising capital than people first expect, and I know now that it is almost impossible to go it alone. Investing time in building my network of contacts helped me secure the funding I was looking for – it was one of the best things I did.
2020 was a landmark year for OnBuy and with sales soaring from a run rate of £24 million to over £200 million, as well as monthly users trending at just under seven million, OnBuy is quickly gaining market share. Our success puts us in a strong position for when we launch our Series B funding round this spring.
We aim to secure backers who want to be a part of our ground-breaking journey to change the way the world looks at eCommerce, and those who can support our proven business model to further establish OnBuy as a household name in the UK and in new markets around the world.
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