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Raising finance for a start-up business

Guest blogger Alex Schlagman, founder of Pocket High Street and

How start-ups can raise finance

All new businesses need funding. Some need more than others. And for many start up’s fundraising requires a major commitment of time and focus throughout the entire lifecycle of the business. This article charts my personal fundraising journey from idea conception through angel funding and beyond.

My company vision

I co-founded, a new app, because existing social commerce services aren’t designed around the way I shop. They aren’t designed for people that ‘shop like men’. turns your smartphone into a Pocket Personal Shopper. It takes the legwork out of the process for any considered product purchase, augmenting your ability to efficiently and confidently make the right shopping decisions every time. connects you to the information you need on all and only the products you want, to the people that you are linked to both socially and by product affinity and to better, more personalised retailer offers that can be redeemed online or on the high street.

Month 1 as a start-up business

We spent our first month as a formed business speaking to as many people as we could to validate our customer problem hypotheses, mapping out our Business Model Canvas, starting version 1 of the full business plan and sketching out our key customer journeys on paper. Even at this stage it was clear to us both that we were onto something big and that we arguably had the right mix of core skills in the team to make this happen.

It was time to explore funding opportunities.

Finding funding options

Raising finance was vital for my company. We looked at each of the following seven options:

  • Bank loans
  • Government grants
  • Angel investors direct
  • Crowdfunding platforms
  • Angel networks and funds
  • Venture capitalists
  • Friends and family

To cut a long story short, we decided to focus on securing £150k–£200k direct investment from professional angels who could simultaneously capitalise the business while bringing targeted experience, connections and gravitas to the board.

This level of investment would give us the runway we needed to get the product to market and into the hands of enough of the right customers to prove the concept. Once we had demonstrated product market fit we would be positioned to raise the additional venture capital required to achieve our year 2 product development and growth objectives.

Easier said than done!

In early March 2013, having been in business little over a month with nothing but a concept and a high level vision on paper, we realised we would have needed to give away about half of our business for the funding we were looking for. This didn’t sit well with either of us.

Increasing our value

We both still wanted to engage angel investors to drive our 1st major seed investment round, just at a different valuation so we shifted our focus to increasing our valuation to a point where we could secure the finance we needed from angel investors at this stage at a level we were all comfortable with.

While we could do a lot of the planning and research we didn’t have the time or skills in the team to complete a full working demo and detailed tech spec of the product prototype to show prior to investment. It was clear that we needed a source of capital to bridge us over from concept to being angel investment ready.

The Start-Up Loans Company

I met Paul, the CEO of Dreamstake, at a networking event in Tech City and we discussed at length how his start-up network and incubator could support One of the things he introduced was the Start Up Loans scheme. My partner had his own savings ready to go into the project so it seemed the perfect way for me to capitalise my half of the investment needed.

The application process was quick and painless – after working with a business advisor, my business plan was approved and we were up and running. The Start Up Loan was exactly the finance I needed to kickstart my business.


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