Scaling your business: when and how to bring in outside investors

Growing a business often means looking beyond day-to-day trading profits. External investment can speed up product development, help you hire key people, fund international expansion or support a merger or acquisition. The trade-off is that you’ll share ownership and work more closely with investors who expect solid plans, clear financials and measurable milestones.

Before you start approaching investors, ask yourself:

• Why you need funding – Is it to launch a product, build a team or move into a new market?
• How much and for how long – What’s the true amount needed to hit your next value-step or break-even point?
• What you’re prepared to give up – How much control and equity are you willing to share?

Investors will ask the same questions, so having answers ready will shorten negotiations and strengthen your position.

What investors look for

Evidence of traction and sound economics
Show consistent revenue and profit trends. If you’re subscription-based, include retention and churn rates, customer lifetime value versus acquisition cost, and detailed sales cycle data.

A credible plan
Your forecasts should link directly to hiring needs, production capacity and sales pipeline. They must reconcile with historical accounts and bank statements.

A clean ownership structure
Keep your share register tidy and free of ambiguous agreements. Ensure option grants are documented and aligned with your agreed option pool.

Protection for intellectual property
Check that trademarks, licences and any contracts transferring IP from founders or contractors are watertight.

Good governance and compliance
Board minutes, shareholder consents, and clear policies (data protection, information security) will all be tested during due diligence.

Regulatory readiness
If your sector falls under the National Security and Investment Act, get advice early. Some deals require approval before completion.

Understanding today’s market

Knowing the market helps you set realistic expectations.

• UK smaller businesses raised £10.8 billion of equity in 2024, across 2,048 deals, according to the British Business Bank.
• Angel investors remain active, with around £1.6 billion of early-stage investment in 2023/24.
• Technology sectors such as AI are seeing larger average deal sizes, showing where investor appetite is strongest.

Choosing the right type of investor

Different investors suit different growth stages:

• Friends and family – Quick but must be handled professionally.
• Angel investors – Bring experience and contacts; many invest through SEIS or EIS tax-advantaged schemes.
• Equity crowdfunding – Ideal for consumer brands with an engaged audience.
• Venture capital and growth equity – Seek rapid expansion and strong market potential.
• Corporate or strategic investors – Offer distribution and credibility but may come with exclusivity conditions.
• Family offices – Increasingly flexible, with varied diligence standards.

Whichever route you take, plan early for HMRC’s SEIS and EIS incentives and set up a robust option scheme if you need to attract or retain key staff.

How I help

Raising outside capital isn’t just about finding the right backer. Your numbers need to stand up to scrutiny and the process must run smoothly.

I help businesses by:

• Reviewing forecasts and business plans from an investor’s perspective
• Preparing financial statements and data rooms for due diligence
• Guiding SEIS/EIS applications and HMRC valuations for share options
• Advising on tax, compliance and ongoing investor reporting

Getting this groundwork right helps you negotiate better terms and keep your focus on running the business.

Ready to explore investment?
If you’d like an investment-readiness review or a second opinion on a term sheet, get in touch.

Together we’ll make sure your finances tell the strong, clear story investors want to see.