Securing investment and helping your business to grow

Once you’ve taken the plunge and turned your idea into a successful business, it’s likely that you’ll need to secure investment to help expand your company. But it’s not as simple as approaching potential investors and just walking away with the cash. You will need to know your company inside out and be prepared to justify what the money will be used for.

I set up Chemist Direct in November 2007, and today it is Europe’s leading online chemist, offering more than 30,000 health and beauty products. By the end of the first year of trading, the company had a turnover of £5m, but I realised that I needed to secure investment to help the business to grow. In March 2009, the former founders of Skype, Niklas Zennstrom and Janus Friis, now of Venture Capitalist fund Atomico, invested £3m. This allowed me to expand the product range, move to a new large automated site and build a strong management team.

I believe that an important factor for investors is how your company stands out from competitors. Does it offer a completely new product or service, or offer it in a new way? A large part of the success of my company is the fact that when it launched, there were few other online chemists. This resulted in high revenues and helped attract investment. The healthcare industry was also relatively untouched by technology and we have tried to disrupt a relatively traditional industry and utilise the power of the internet.

There are two main types of business investors – 'angel investors' and 'venture capitalists'. An angel investor is a person who provides capital for a business. They may be a retired entrepreneur or executive who wants to mentor other entrepreneurs and provide advice and contacts.

Venture capitalists provide pools of capital from a combination of sources such as private investors and institutions like banks. In exchange, the investor receives a share of the company’s equity, and normally seeks a non-executive board position so they can help with the strategic direction of the company. According to the British Venture Capital Association, about 50 per cent of venture capital financing is for expansion, which was the case with me. I didn’t go out looking at lots of different VCs. I met Atomico through a mutual friend and I was really impressed. I felt that they could add a lot of value in terms of their experience and contacts; they also had an excellent track record with Skype and had been entrepreneurs themselves.

Investors are looking for high-potential businesses run by a team with passion. Although it’s important to get potential investors excited about your company, don’t present outrageous projections as they won’t take you seriously. It’s also important to show how responsible you are in managing and growing your company. I started the company in a shed at the bottom of my garden to keep costs down and paid myself a minimal wage. It is essential to show that you are being prudent and ploughing resources straight back into the company.

I also invested my own money into the business which is essential to show you have skin in the game. It is vital to show that you have made a commitment to the company and believe in the product or service which you offer. Investors will feel disinclined to invest in your business if you haven’t.

As part of your pitch to investors, refer to your previous experience and explain what you and the rest of the team bring to the company. Before setting up Chemist Direct, I previously worked as a management consultant, working with Citigroup, Deutsche Investment Bank, SAP and Deloitte Consulting. This involved project managing complex change management initiatives, working with decision makers on processes, people and systems. This allowed me to see first-hand how to make a difference which has helped me when running my own business. It’s also essential to be prepared before meeting with potential investors. Make sure that you provide a clear business plan with your long-term goals, a financial plan, a marketing plan and customer research. You need to know basic statistics about your company including revenue, users, activity and competitors.

Don’t forget to do your homework on the investors too. Research other companies they have invested in and look at their career andbusiness experience to find out how they could help you. Atomico invests in disruptive technology companies and the founder also set up Skype which had more than 309million registered users within five years of its launch. As well as securing capital, I wanted to tap into the team’s expertise to help expand Chemist Direct, and increase customer numbers and sales.

Mitesh Soma is founder of www.chemistdirect.co.uk

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
PROMOTED VIDEO
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs Student

Year 1 Teacher

£12 - £90 per day: Randstad Education Hull: Randstad Education require a year ...

Primary Teacher - Hull

£90 - £120 per day: Randstad Education Hull: Are you a flexible and inspiratio...

SEN Teaching Assistant Runcorn

£50 per day: Randstad Education Cheshire: SEN Teaching Assistant EBD , Septemb...

Primary Teacher EYFS, KS1 and KS2

£85 - £130 per day: Randstad Education Preston: Randstad Education are urgentl...

Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried