Mountside Ventures is a leading early stage advisory firm, supporting startups and growing businesses. The firm provides interim CFO and fundraising advice for Series A and Series B stage companies - one of the few focusing on this part of the market. Mountside also run a leading fundraising accelerator for pre-seed and seed founders. The team previously ran one of the Big 4's startup propositions and have deep experience in working with companies at this particular stage. Headquartered in London, Mountside supports companies across the UK and Europe.
The Tech & High Growth team at Cooper Parry are the UK’s leading startup and scaleup partner in the accounting and tax space, working with fast-growing venture backed businesses and the people that own them, to get ahead of the challenges and opportunities that lie in wait.
The team work with over 500 early stage and over 250 scale ups, building relationships with the Founders, CFOs, and Boards of high growth businesses. Unlike any other team in the tech sector, they support clients across all financial needs from Pre-Seed to Exit and beyond.
The Tech & High Growth team is an internal ecosystem built specifically for high growth businesses, and it doesn’t exist at other firms. That’s just one of the reasons why Cooper Parry are known as the rebels of accountancy. They don’t do suits and don’t do boring, instead cutting straight to the answers with the freedom to work closely with clients to deliver the pragmatic and timely support they need.
With an entrepreneurial spirit at its core, CP is here to ‘Disrupt, Lead and Make Life Count’ – backed up by being the 22nd Best Company to Work for in the UK and No.1 Accounting firm to work for in the UK. All whilst being largest accountancy firm to be B Corp Certified.
Operating from a network of 11 offices across the UK, the team serves clients across multiple industries including technology, financial services and digital assets, retail and consumer, health and social care, creative and media, professional services, property, construction, manufacturing and industrials.
Bixteth Partners specialises in sourcing growth capital for early-stage companies and providing advice to founders on capital requirements and growth planning with the aim of getting clients “investment ready” whatever their stage - Post-Seed, Early Growth, Series-A or beyond.
Led by Guy Briselden, who has over 30 years of capital markets experience, the team of partners has deep experience in public and private markets, from Private Equity through Investment Banking, Financial PR and Board roles, and an extensive investor network of institutional firms, HNW individuals and family offices. They undertake a staged and targeted approach to investor outreach to help companies raise the right amount at the right time, with investors that represent the best fit for their growth plans. They also assist with plans for an ultimate exit or strategic investment, whether that turns out to be private equity or secondary VC investment, trade sale or IPO (Aquis, AIM or Main Market).
Bixteth's sweet spot is funding requirements between £1m and £10m, but have supported on smaller and larger deals. They are sector agnostic, with the exceptions of deeptech and life sciences where they are less active. They have most recently advised companies in the premium spirits, digital printing and retail tech / Metaverse industries. Bixteth do not often assist companies which are pre-revenue or in very early revenue as it is not a sweet spot for their investor network; however, they are happy to offer advice and potentially some introductions.
In this section we cover how to create an impactful crowdfunding campaign that covers the key points required to enable investors to consider the investment opportunity.
A crowdfunding campaign is a financial promotion and therefore must be formally signed off by a regulated entity, which will either be the crowdfunding platform itself or their appointed representative. This approval process will confirm that the campaign is clear, fair and not misleading.
You will need to provide supporting evidence for all facts and statements made in the campaign. It’s best to collate these documents as you draft the campaign so that nothing is missed.
Below we cover a checklist of items that should be included within the core sections of a typical crowdfunding campaign.
Summary
This sits at the top of every crowdfunding campaign and includes:
The pre-money equity value can be calculated as follows:
Where:
Idea
Routes / channels to market
Team
Financials
Funding / Investment Opportunity
Inspire
Consider your audience carefully and what might motivate them to invest. Each investor has a different appetite and you are attempting to appeal to a large and varied pool. Crowdfunding investors are often motivated not only by financial returns and tax incentives, but also by the company’s mission, social impact and added perks.
Be transparent
While investor Q&A is a core part of the crowdfunding process, a well drafted campaign should minimise the number of questions. Many of the questions raised during live campaigns relate to clarification – try to be as specific as possible and avoid industry jargon.
Change perspective
Take a step back from the detail and consider investment risks instead of operational risks, i.e. what are the things that will impact the performance of the business and thus the returns that investors will expect.
A video is an important part of a campaign – traditional fundraising involves a lot of a face to face meetings with potential investors, whereas crowdfunding involves appealing to a disperse, largely online audience and you cannot meet everyone. A video replaces the face to face meeting, giving investors the opportunity to hear directly from you and members of your team and to see your products or services in action.
There are a number of different companies that film and produce crowdfunding videos for you. The crowdfunding platform you are using will likely have producers that they can recommend, and may even have an arrangement in place to do this more economically than approaching a producer independently. Most crowdfunding platforms will expect you to cover the cost of producing the video. Some companies use the opportunity to produce a version that can also be used for generic marketing purposes, to make the exercise as cost effective as possible.
Below we set out our recommended video template:
Format
Content
A few style tips
Try to speak clearly and slowly. As time will be tight, make sure your script is short and impactful. This may require a few rounds or refinements before it is ready to film.
Try not to appear too formal. Professionalism is important; however, potential investors will use this as an opportunity to assess your character. This can be achieved by speaking to a friend or colleague instead of directly to camera, while filming.
It can be helpful to provide certain supporting documents to help potential investors consider your investment proposal. Some of these items may be subject to restricted access owing to sensitivity.
Tax due diligence may form part of financial due diligence (FDD), or may be a standalone scope, and is usually undertaken by institutional investors in either a venture capital round or, more commonly, in a growth capital round.
The intention of tax due diligence is to understand the different taxes that apply to the business, or may apply in future, the application of different tax jurisdictions and to assess any current or future potential tax liabilities that may arise.
It is usually undertaken by a third party accountancy firm through an initial questionnaire and follow up questions to clarify.
The scope will include compliance with all relevant categories of tax, such as:
As well as the potential tax implications of the transaction and related activities, including:
Here’s a checklist of items to compile in preparation for tax due diligence:
Commercial due diligence for venture rounds is typically conducted as a joint effort between the investors themselves and individuals from their network. Some funds have specific advisory boards or networks dedicated to this purpose – comprised of individuals with specific, sector expertise that they can call upon.
Occasionally, funds may also wish to formally appoint a consultant, possibly an individual or a firm, to conduct a more formal exercise. This may be applicable in the case of larger rounds, more complex businesses or a novel market.
Commercial due diligence (also referred to as CDD) is the diligence stream that focuses on the commercial elements surrounding a company, in particular – the market in which it operates, it’s positioning within that market, for example, in relation to competitors, the strength of the product or service and the customers it currently serves.
The objective for investors is to verify the legitimacy, strength and potential of the product or service and thus bring confidence in the future growth prospects and value generation of the business.
Investors will begin assessing the commerciality of the product or service from the initial meeting. Unlike financial and legal due diligence, the scope of commercial due diligence is more variable and tailored to each individual business. It is not usually organised into a specific scope and may comprise a number of different activities and workstreams.
In practice, it may comprise:
Market outlook
Areas of interest:
A large addressable market that is growing is an important feature for venture investors.
Positioning within the market and competition
Areas of interest:
There is arguably some fatigue among investors of the top-right-quadrant graph, which plots competitors on two axes and features the company in the top right. It is difficult to be explicit about the nuance of how the business is differentiated through a graph such as this. This could be used to set the scene, while a table that lists the more detailed features of competitor’s offerings, alongside your own, may be more helpful in answering the question of why and how you are different.
How compelling the company’s product or service is
This is assessed through a trial or demo of the product, and usually discussions with certain customers.
Areas of interest:
Quality of the business model
There is some overlap here with financial due diligence, but the objective is to understand the legitimacy of the business model, either in generating a profit or equity value. From a commercial perspective, areas of interest are as follows:
Commercial due diligence (also referred to as CDD) is the diligence stream that focuses on the commercial elements surrounding a company, in particular – the market in which it operates, it’s positioning within that market, for example, in relation to competitors, the strength of the product or service and the customers it serves.
The objective for investors is to verify the legitimacy, strength and potential of the product or service, as well as the market opportunity, to assess the future growth prospects and value generation capabilities of the business.
Investors begin assessing the commerciality of the product or service from the initial meeting. Unlike financial and legal due diligence, the scope of commercial due diligence is more variable and tailored to each individual business and fund. It is not usually organised into a specific scope and may comprise a number of different activities and workstreams.
In practice, it may comprise:
Market outlook
Areas of interest:
Growth capital investors are looking for a sufficiently large addressable market that is ideally growing.
Positioning within the market and competition
Areas of interest:
There is arguably some fatigue among investors of the top-right-quadrant graph, which plots competitors on two axes and features the company in the top right. It is difficult to be explicit about the nuances of how the business is differentiated through a graph such as this. This could be used to set the scene, while a table that lists the more detailed features of competitor’s offerings, alongside your own, may be more helpful in answering the question of why and how you are different.
How compelling the company’s product or service is
This is assessed through a trial or demo of the product, and usually discussions with certain customers.
Areas of interest:
Quality of the business model
There is some overlap here with financial due diligence, but the objective is to understand the legitimacy of the business model, either in generating a profit or equity value. From a commercial perspective, areas of interest are as follows:
Legal due diligence for venture rounds is typically conducted by the investor’s legal advisors, i.e. the firm that is also preparing the investment documentation.
Depending on the complexity and extent of the scope, you may choose to answer the questions yourself, or you may ask your legal advisors to do this on your behalf.
Legal due diligence (also referred to as LDD) is the diligence stream that focuses on your contracts and agreements. Investors are keen to ensure that your business is operating with the appropriate agreements, protections and processes in place.
The investor’s appointed law firm will typically issue a questionnaire with a series of information requests and questions. You and your appointed law firm (if applicable) will then provide the answers and supporting information and there may be some discussion back and forth to clarify certain items.
This exercise will usually result in the investor’s lawyers preparing a short legal due diligence report, summarising the responses, their views on them, any key risks or matters that should be dealt with prior to completion of the transaction.
You may be asked to provide a warranty over the accuracy of the contents of the legal due diligence report.
Exactly what is included within an LDD scope will vary between investors; however, there are a number of core areas that most investors will review.
Corporate
This involves confirming the current ownership of the company’s equity and corporate structure. The investor’s law firm will run a search of Companies House for each corporate entity (limited company or otherwise) and review the latest annual returns to confirm the accuracy of the share cap table.
It is worth ensuring the company’s annual return is up to date and any subsequent changes in the equity capital have been documented in the company’s statutory book as appropriate.
Employment
This entails confirmation of the employment status of key members of the team (and in some instances, all members of the team).
Investors or their appointed law firm will ask for copies of service agreements (also referred to as service contracts or employment contracts) so that they can review the terms and check their suitability. Areas of interest include:
If you do not have a service agreement, you will need to put one in place as part of the transaction. Before having this drafted, you may want to ask your investor if they have a template that they prefer to use.
Investors will also ask for details of any other incentive schemes in place, such as bonus arrangements or option schemes.
Finally, they will ask if there are any outstanding or unresolved disputes with employees or former employees.
Contracts
If part of the scope, this involves a review of any key contracts, for example, customer contracts, supplier contracts and / or leases.
This helps investors to understand:
Customer, supplier and financing contracts can sometimes include “change of ownership” clauses, which require that the relevant party is notified of any change of ownership or control of the business. In some cases, this clause may also require that the other party consents to any change of ownership prior to completion. Even a minority equity investment can sometimes be considered a change of ownership and therefore it is a good idea to do a quick search of any key contracts for these clauses and notify the relevant parties before completion of the deal.
Intellectual Property
Investors will want to ensure that all IP is owned by the business and not by individuals or employees. They will also review what, if any, arrangements you have in place to protect your IP, such as patents.
Health and Safety
Among other sectors, health and safety is of particular importance to businesses operating within construction, engineering, food production, manufacturing and leisure. An investor may ask to review your health and safety policy to ensure that you take these responsibilities seriously.
Insurance
Investors may wish to review the company’s insurance policies to ensure that there is appropriate cover in place.
Anti-bribery
Investors may wish to discuss your approach to preventing and reporting bribery and may review your anti-bribery policy, if you have one.
Legal due diligence (also referred to as LDD) is the diligence stream that focuses on the company’s contracts and agreements. Investors are keen to ensure that the business is operating with the appropriate agreements, protections and processes in place.
The investor’s appointed law firm will issue a questionnaire with a series of information requests and questions. You will be required to provide the answers and supporting information, for which you may ask your appointed lawyer for help. There will then be some discussion back and forth to clarify certain items.
The investor’s lawyers will prepare a short legal due diligence report which summarises the responses, their views on them and any matters that should be dealt with prior to completion of the transaction.
You may be asked to provide a warranty over the accuracy of the contents of the legal due diligence report.
Exactly what is included within an LDD scope will vary between investors; however, there are certain common areas of interest for the majority of investors.
Corporate
This involves confirming the current ownership of the company’s equity and corporate structure. The investor’s law firm will run a search of Companies House for each corporate entity (limited company or otherwise) and review the latest annual returns to confirm the accuracy of the share cap table.
It is worth ensuring the company’s annual return is up to date and any recent changes in the equity capital have been documented in the company’s statutory book as appropriate.
Employment
This entails confirmation of the employment status of key members of the team (and in some cases, all members of the team).
Investors or their appointed law firm will ask for copies of service agreements (service contracts or employment contracts) to review and assess the suitability of key terms, including:
If you or key members of the team do not have service agreements, you will need to put them in place as part of the transaction. Investors often have a standard template, or this can be drafted by your legal counsel.
Investors will also ask for details of any other incentive schemes in place, such as bonus arrangements or option schemes.
Finally, they will enquire as to whether there are any outstanding or unresolved disputes with employees or former employees.
Contracts
This involves a review of any key contracts, for example, customer contracts, supplier contracts and / or leases.
This helps investors to understand:
Customer, supplier and financing contracts sometimes include “change of ownership” clauses, which require that the relevant party is notified of any change of ownership or control of the business. In some cases, this clause may also require that the other party consents to any change of ownership prior to completion of the transaction. Even a minority equity investment is sometimes considered to be a change of ownership or control and therefore it is a good idea to search for these clauses within all key contracts and notify the relevant parties before completion of the deal. Time taken for third parties to respond can sometimes hold up completion.
Intellectual Property
Investors will want to ensure that all IP is owned by the business and not by individuals or employees. They will also review what, if any, arrangements you have in place to protect your IP, such as patents.
Health and Safety
Among other sectors, health and safety is of particular importance to businesses operating within construction, engineering, food production, manufacturing and leisure. An investor may ask to review your health and safety policy to ensure that you take these responsibilities seriously.
Insurance
Investors may wish to review the company’s insurance policies to ensure that there is appropriate cover in place.
Anti-bribery
Investors may wish to discuss your approach to preventing and reporting bribery and may review your anti-bribery policy, or ask you to put one in place.
Environmental
If relevant to your business, an investor may want to check that you have all the necessary permits and licenses in relation to environmental matters.
Regulatory
If relevant, an investor may ask for evidence that all relevant regulatory permits are in place in order for the company to conduct its business.
Banking
Investors may review the company’s banking arrangements and facilities, specifically: lenders, facility limits, security arrangements and covenants.
Equity investment is all about partnering with people. Understanding how you and your team operate is important to potential investors.
From your first interaction, they will be assessing you, your approach, your ability to deliver your plan, how you work with others, how well you listen and consult and where you might need extra support.
For obvious reasons, perceived weaknesses in the founders or management team is rarely given as a reason for decline; however, it is a very common reason in practice. It is therefore important to maintain a pragmatic approach throughout the deal process – highlight your strengths, be realistic, be open about your weaknesses and areas for improvement, be thoughtful and reasonable in your negotiation and be patient with the rounds of questions and diligence.
It’s also important that, throughout the deal process, you are able to assess how well you work with your potential investors so that you can be confident their investment will result in a good and workable strategic partnership.
Investors will be seeking to gain an understanding of:
On a more serious note, they will also run basic background checks on criminal convictions, director disqualifications or PR issues. It’s best to be up front about anything that would likely cause concern.
A note on ambition – there is a lot of conflicting advice around on how “ambitious” founders should be in their approach. This is partly because investors have a varying appetite for risk. It’s helpful to possess and portray a certain level of ambition and resilience to convey the confidence you have in your product or service, but ensure that this level of ambition is credible and is backed up by realistic and achievable forecasts for the business.
There are a variety of means for assessing individuals and the team dynamic, some more formal than others:
Spending time together
When you're trying to juggle running your business as well as a fundraise, it can be difficult to remember to spend time building this relationship. If time is tight, this can be done in part through making due diligence sessions face to face. It sounds obvious but it is fundamental and often missed - make time to invest in getting to know your investor.
Referencing
Investors may ask you to provide references – usually at least one personal and one professional.
Questionnaires
You may be asked to complete a questionnaire that covers any historic convictions, directorships, alternative income or activities etc. which you may be asked to warrant at completion.
Psychometric testing
You may be asked to complete a psychometric test.
Consultants
An investor may formally engage a specialist consultant to spend time with you and the team and provide an assessment. Alternatively, they may introduce an individual from their network or portfolio to do the same on a more informal basis.
Below are a few of the more common areas of weakness identified by venture investors.
Lack of clarity in roles or imbalance between the founders
It can be difficult to clearly define roles in a business that is evolving very quickly, and hence this issue is common in high growth, early stage businesses.
Ways to mitigate this
Limited prior experience of growing a successful business
Investors tend to favour entrepreneurs that have done it before, i.e. successfully grown and sold a business. If this is the case then highlight it, if not, it can be helpful to demonstrate track record within a relevant industry and related successes.
The need for a finance lead or finance director
It is very common for early stage, high growth businesses to lack support in finance and reporting. With new external investment and shareholder reporting, the need for support in the finance function will increase. If you intend to appoint a head of finance or a finance director, or your investor requires that you do, either as part of the process or post completion.
Misalignment in approach or personality
This can manifest in a number of different ways and is not easy to mitigate – if there is a fundamental misalignment of approach, then the partnership is unlikely to be successful.
A strong team dynamic is the best way to overcome this, if it becomes an issue in securing investment. A particularly driven and ambitious CEO, with the capacity to listen, alongside a more prudent operations or finance lead, may present a successful combination, while one of these individuals acting alone may not be considered investable.
