How to win small business investment – International Women’s Day episode

To celebrate International Women’s Day, we bring you a bumper small business investment episode with three brilliant guests who have fascinating stories to tell about how they built their businesses.

In this episode, we are talking with Sarah Turner, the co-founder of Angel Academe, Rushina Shah, founder of snacking brand Insane Grain, and Sarah Norford-Jones, co-founder of Yeo, a private messaging app.

Navigate our show notes to quickly find the information you need.

What are the challenges for female entrepreneurs?

What are the differences between the corporate and start-up worlds?

Are there systemic diversity challenges in business?

How can women deal with male-dominated investor meetings?

Do we need more female leadership role models?

Bad investors can kill your business.

What are the best funding routes?

How can you get more pitch practice?

What alternative funding routes are available?

How do you create a business valuation?

Delay chasing funding as much as you can

Put your savings into your business as a director’s loan

Build a tribe – people who can support your business journey

What tough personal questions could investors ask women?

How can business culture support families and flexibility?

What are the challenges for female entrepreneurs?

Bex Burn-Callander:

Sarah Turner, do we need to be having a conversation about female entrepreneurship in 2021?

Looking at the data, it feels like we do, but what is your experience as an entrepreneur and an investor? What’s the state of play? What are the barriers for women?

Sarah Turner:

It’s a big topic. Although we are celebrating International Women’s Day, we say at Angel Academe that we’re celebrating women every day, not just one day of the year.

I think female entrepreneurship is in good shape. 40% of UK companies now are either founded or co-founded by women.

The challenge we have is that you have women disproportionately represented in the less-productive sectors, which are more vulnerable to coronavirus and recession.

We need to encourage more women to set up high-productivity businesses, which generally means technology and technology-enabled businesses.

Bex Burn-Callander:

You started Angel Academe because you wanted to change the system. Tell us what you were doing before because you were very successful in tech before focusing on angel investing.

Sarah Turner:

I’d spent my career in technology, a lot of it working with startup companies. I introduced high-growth potential technology companies to investors, helping them grow in various ways.

And then, about nine or 10 years ago, I started doing a bit of angel investing, where I was quite often the only woman in the room.

When women did come and present in those groups, they didn’t connect and land their messages in quite the same way their male counterparts were doing.

It made me think about what would happen if more women were in the room and participating in this world.

I found a statistic that said that women own 48% of the UK’s wealth, so it’s not lack of money that’s holding us back from stepping forward as investors. If you look at the finance community, women are significantly under-represented similarly to technology.

So my experience was that female founder presenting to mostly male, older decision-making makers weren’t getting the same reception as men were, especially if they were representing software businesses.

I wanted to do something about it. So, I started building an angel network, targeting women to participate as angel investors.

Bex Burn-Callander:

I think the proof is in the pudding, and we’re seeing so many more women coming forward and investing money, as well as pitching for investment.

Not all companies need to raise money, but, interestingly, so many decide to go through routes run by men.

What are the differences between the corporate and start-up worlds?

Bex Burn-Callander:

Rushina, I’d love to bring you in here because you followed the quintessential entrepreneur journey.

You were in a great job, doing well and a high-flyer. But you decided to jack it all in for the risky adventure of starting your own company.

Do you want to tell me about that? In your experience, has being a woman has been a factor in either your success or your failure?

Rushina Shah:

I’m the founder of a brand called Insane Grain. My background is in the corporate world. I had over five years of experience at Procter & Gamble, working on many different brands. I worked at Reckitt Benckiser before that.

With the corporate environment, you have a big budget and lots of funding. It was a real leap to quit that and start my own business.

I knew that there were different options available to me – things like crowdfunding and VCs (venture capital). I found out very early that it was more challenging for a woman to secure funding in the earlier stages.

I’d also had heard the stat that less than 1% of venture funding in the UK goes to female-led businesses. So naturally, that was daunting.

I needed to prove the business concept before starting to look for VC funding, so I started looking for non-traditional funding routes.

Initially, I reached out to my Instagram followers, which sounds ridiculous, as I only had about a thousand followers.

I got four people to respond to me on Instagram, and they ended up all being investors. Three men, and one of them a woman, which was great. It got the business off the ground, and I was able to prove the concept.

My experience and passion for the business were more potent than people looking at my gender as a barrier.

Are there systemic diversity challenges in business?

Bex Burn-Callander:

Sarah Norford-Jones. You are building one of the tech businesses that Sarah Turner earlier discussed – a productive or high-growth business.

Talk to us about Yeo and your journey to starting that company.

Sarah Norford-Jones:

Yes. It’s Yeo Messaging, and it stands for, Your Eyes Only.

We’re a private messaging platform that connects businesses with individuals. What makes us different is we deliver messages not just to the device but to a human being.

Privacy is very topical – it is something that many people are talking about, and many people require.

We use continuous facial recognition to authenticate the person that’s reading the message. So, if the app doesn’t see your face, then you can’t see the message.

We started Yeo a few years ago with the idea that we wanted to put control back into the sender’s hands. We thought we wanted to start as a consumer product, but we quickly realised there’s a massive business requirement for a privacy-compliant instant messaging tool.

Bex Burn-Callander:

I’m fascinated by your journey so far because you started the business with your dad. That’s a gripping power dynamic and must be interesting when you pitch and meet big customers and suppliers.

How has that affected how people treat you?

Sarah Norford-Jones:

In the beginning, when I first started, we fundraised. Through family, friends, and private investors, we raised £500,000.

I would go into meetings with my dad, and I’d be so prepared for all the questions.

I’d be ready to win over investors or pitch the idea, but I would always get glossed over. All the hard-hitting questions would always go to my dad.

But he’s brilliant. He got angrier than I would because he would just bat them over to me and say. “Sarah, you take this question.”

I think he’s always been a huge advocate for making sure that our company is equal. We both answer, and he’s given me that platform to be confident and feel like I’m also worthy of answering questions.

Bex Burn-Callander:

That’s an interesting point because I think a lot of the time, with diversity in business, the onus is put on the woman – you need to be more confident and face your imposter syndrome.

However, sometimes it’s more about changing the system – having people who hold power willing to give that power away.

Sarah Turner, do you mind if I bring you in here?

You talk about the system’s problems and how those need to be addressed, rather than telling female entrepreneurs they need to pitch better or pitch for more money.

Talk to me about those systemic issues and the pervasive problems that we’re not addressing.

Sarah Turner:

I think that’s exactly right. While entrepreneurs have got to pitch confidently by owning pitches and being assertive, there’s a lot we can do to improve the environment in which they have to operate.

We should be conscious about improving diversity in the investor community because we’ve all got bias. I think it’s hardwired, and we need a better appreciation of how women communicate.

So men not just writing women off at the start of a meeting. I have seen men’s eyes glaze forward when a woman comes to the stage.

I think confidence is contextual.

We’ve got to give those speakers the confidence to perform their best. Having more women in the room is just a vital component of that.

How can women deal with male-dominated investor meetings?

Bex Burn-Callander:

Rushina, you’re nodding at me. I think that you’ve had the experience of being daunted by being the woman in the room.

How have you dealt with those environmental pressures?

Would you be daunted if you were going to pitch a room full of men today? Was it just something that you had to get over, or something in your mind?

Or has the system changed?

Rushina Shah:

I think that it’s important who you have backing you. My co-founder – he’s a man with more experience than me – 30-plus years in the food and drinks industry. He’s phenomenal.

But when we do go for pitches, the questions are often directed towards him. But he’s great at saying, “Well, no Rushina, this is for you,” because he knows that maybe I’m being dismissed or acknowledged.

I think the food and drinks industry is universal, so both men and women better understand it. It’s easier to grasp what we’re pitching.

But I’ve spoken to other female founders in industries that are female-focused. There are two girls who I remember meeting at this pitch day who own a lingerie company.

All of the VCs in the room were men, and they had pitched three or four times before, all to men. They were trying to pitch lingerie, and obviously, these men didn’t understand the problem they were trying to solve.

So they thought, “Right, we need to show them exactly what the benefit of this product is.” So, they took a pair of shoes, and they put them underneath these guys’ chairs. They knew it was the size too small for them.

At the start of the pitch, they said, “Ok, what we want you to do is put those shoes on.” And the men said, “Well, this is a size too small for our feet.” And they said, “Well, put them on for the duration of the pitch because that’s how women feel when they’re wearing the wrong bra.”

I thought that was just a great way of getting around the issue of the fact that it was men in the room, not understanding what their concept was or what they were trying to sell.

That showed me that even if you feel daunted going into a pitch, if you know your business and believe in what you’re selling, that will shine through, regardless of what gender you are and who is in the room.

Bex Burn-Callander:

You can use creative thinking to overcome a subconscious bias. If it is impossible to address with words, you can develop a creative way around it – a hack.

Sarah Turner, have you seen smart moves like that, which worked well, that some of our listeners could learn?

Any other innovative ways of getting around any subconscious bias if you end up pitching to a room filled with the opposite gender?

Sarah Turner:

I think you’ve got to do something to grab people’s attention whether you’re pitching to men or women because they’ve got to buy you as a founder and somebody who’s able to surround themselves with the best talent to grow their business.

Yes, sometimes women have challenges presenting a business for a female market and convincing men that that market is big enough and interesting enough.

Do we need more female leadership role models?

Sarah Turner:

But I think the problem is even more extreme.

If you’re a female founder presenting a software business or non-traditional business, we don’t have the successful role models of women building scalable technology businesses. All the stereotypes point to Mark Zuckerberg and Bill Gates and people like that.

It’s young white guys in hoodies.

I find establishing your credibility as a relatively young female founder of a tech business is quite a challenge for many women.

That is part of why we’re focusing our efforts on technology because I think that’s where we can help make the most significant difference.

Technology businesses are just so crucial in terms of solving some of the challenges facing the world.

Sarah Norford-Jones:

I completely agree. I think a lot of women do. They look up to other women, and they believe one day I would love to be like that, or they’re paving the way in the technology industry.

There’s not many mentors or inspirational women leaders doing what I’m doing.

There are a few nuggets out there of passionate leaders and mentorship, but there aren’t that many that come forward and say, “I would love to help you, or I would love to support,” or even to give advice.

That’s something that I definitely would like to do more of, just to put myself out there. If any other women are looking to make their way in the tech industry, I would love to give my support because I feel its lack.

Sarah Turner:

I think it’s essential that we’re all conscious about giving back. You’re still building your business which is your main priority.

But there are loads of things you can do. And there are some excellent networks now.

Rushina Shah:

I think we all need to start looking at girls at school and influencing them right at the early stages of looking at their career choices. I think back to when I was at school. I didn’t know entrepreneurship was even a route or an option.

I think that’s slightly changing.

My little cousin said, “Oh, I’ve got an essay to write about a business, and can I write about your business,” and she was excited about it.

If we are the future role models, and we want to change the thinking, I think it needs to start right from the beginning. It is not just to girls but also to men, showing that it’s possible for everyone, regardless of gender.

Sarah Turner:

I think that’s right. Just what I was saying before about women tending to set up businesses in low productivity areas. I think we need to raise awareness of entrepreneurship.

We’ve got to encourage more girls into STEM (science, technology, engineering, maths) training, but not forgetting boys as well.

Because even if you don’t end up in a STEM job, it’s going to set you up for the future. The world is all about technology, even if you’re building a non-technical business.

Bex Burn-Callander:

Sarah Norford-Jones, you didn’t see many inspirational female figures in tech when you decided to start your business.

So, what was it that was different about your experience that meant you still felt you could do it anyway?

I’ve read that you grew up in Silicon Valley. Did that affect you? Did that make you feel like you had more faith in your abilities?

Sarah Norford-Jones:

I started my career in advertising and marketing, but I always had a passion for technology. My father, who is my co-founder, worked in technology for the past 30 years.

We require technology for so much, and there’s always stuff that we can uncover. I always wanted to get involved and do something in tech.

The idea of Yeo came about because my dad was shocked at the way the system is working now.

As soon as you hit send, you lose control of your content, message, document or whatever it may be, whether it’s on email or any instant messaging platform we’re using today.

He wanted to put back control into the hands of the sender, and he came to me and said, “Oh, I’ve got this idea, but I don’t know how to bring it together.”

So we worked on that together in building that idea and what it is today.

I think having my background in design, advertising and marketing, I saw where it would fit. Our expertise works well and complements each other.

Bad investors can kill your business

Rushina Shah:

I have been through three funding rounds. The first one was small scale – getting the brand out off the ground, getting traction in the industry, and securing more funding at a slightly higher valuation.

Then I went through angel investors, which, again, was a great experience. We’ve got a mix of both men and women who’ve invested in the business.

The third round was where we needed a chunk of money – a six-figure investment, and initially, we approached a venture capitalist (VC).

I’d heard that they were very corporate and severe. It wasn’t about you as a person or the founder behind the brand, but more around what could deliver, the financials, profitability, etc.

So I went with my co-founder to this meeting, and we sat down, and they addressed the entirety of the meeting to my co-founder.

They didn’t look at me once.

We ended up getting confirmation of the funding. And my gut said, “This doesn’t feel right. It feels like they will dismiss and not address me when it comes to running the business.”

I am essentially the founder. I set up the business. My co-founder came into the business slightly later, but I’m the day-to-day person who runs the business. They didn’t feel like they were the right fit.

It was a difficult choice to make because funding takes a lot of time when you’re setting up and running your business.

But it was the right one because then I came across a joint venture set up by a company called Mission Ventures, a group of phenomenal entrepreneurs who have successfully set up and exited their businesses.

Mission Ventures had partnered with the baking company Warburtons, a real great fifth-generation family business, to create Batch Ventures.

They were looking for businesses – pre-dominantly startups that they could get behind.

That meeting was last summer in central London. I got there early. I was excited and knew all my numbers and everything off by heart.

If you could ask me a question, I would have known the answer because I’d done all my research and had prepared.

I opened the door, and there were six men sat around a massive conference table. All suited and booted in their shirts and their suits, and I was in a bright, orange jumper with the word Insane Grain across my chest.

I walked in thinking, “Oh gosh, what have I done. I should have put on a suit.”

And for a split second, I thought, “Why am I wearing this?”

I sat down, and it was Jonathan Warburton, who runs the business himself with his cousin, who was in the meeting, sat right next to me.

And the whole session was about me as a person.

Of course, the financials were an element of it, but the focus was on why I believed in the company. They didn’t address my co-founder.

They addressed me directly because they knew that I was the person who was the face behind the brand.

That was refreshing.

And it showed me that Batch Ventures were the right partners. So straight away, I just felt like the right fit. And I was excited to have them on board.

Bex Burn-Callander:

So you turned down money that was a done deal because you felt that the relationship wasn’t right and that they weren’t respectful.

It’s not fuelling a broken system by making choices like that and walking away when it feels uncomfortable. Admittedly, not everyone can be in that position, but you could make that choice.

Sarah Turner:

Bad investors can kill your business. We always say it’s a bit of a cliché, but it’s easier to get a divorce than to get rid of bad investors. So, you’ve got to find ones that align with your business.

If it starts off looking wrong in the first place, it’s only going to get worse. So, make sure you do some due diligence on your investors.

That you like them as people, and they want you as people, and they believe in you.

I think Rushina’s story is significant because what Warburtons are buying into is the fact that you’re young and you’re fresh.

You’re probably the opposite of what they are, and that’s what they need in their business.

I think if you’re a relatively young founder talking to older people, you’ve got to make the most of that, haven’t you? You can see something that they might not be able to see because your perspective is different.

Sarah Norford-Jones:

When going for investment, somebody told me that the investor and your relationship would be like a marriage. So, you’ve got to make sure that you get on with one another.

And you’ve also got to know that you’re both reaching for the same goal and vision at the end of the day. Otherwise, it could be a disaster.

Bex Burn-Callander:

And just back to Sarah Turner, what are some of the questions founders should ask at those initial stages that can reveal the investor’s culture?

Are there any probing questions that you find unearth quite a bit?

Sarah Turner:

Ask questions about themselves. It would help if you spoke to other businesses, they’ve invested in.

Ask them to introduce you to other founders they’ve invested in, so you can understand the working relationship.

The more extensive the company’s stake, the investors will own, the more critical this due diligence and alignment are.

Suppose it’s somebody making a relatively small investment that isn’t going to have a considerable influence. In that case, it’s probably more just some personal questions to make sure that you’re personally aligned.

But if it’s a big institution that’s putting in a big chunk of money, and therefore will own quite a piece of your business and possibly have a place on your board, they’ve got to align with you.

So who are they? What else have they invested in? How have they supported those businesses?

Read the small print. Make sure you know all the terms and conditions if there are any. It’s essential to be thorough.

Bex Burn-Callander:

And maybe try and speak to some of the investing companies that they haven’t introduced you to, so you’re getting not just the crème de la crème of relationships, but also the ones that maybe they didn’t put forward, so you get a bit more of a balanced view.

Sarah Turner:

Yes. I think it’s a good idea to speak to as many people within reason as possible. But not all investments go well. With the best will in the world, many of them will go wrong, so this is a high-risk strategy.

I would seek out the people for whom the relationship has worked mainly, rather than the ones where it hasn’t, because I think the investors will be trying to reproduce that rather than the failures.

What are the best funding routes?

Rushina Shah:

I believe women launch businesses with 53% less capital on average than men.

When I was reading through the Alison Rose Review of Female Entrepreneurship, 40% of the women said they don’t believe that they’re going to get funding, so they don’t even try.

I think that’s where it’s up to us, as people who’ve done it before, to educate those founders and those people who are starting up to show that there are lots of different funding routes available to them.

It’s not necessarily just the VC option, but crowdfunding, angel investors and family and friends. There are various routes that people can go through.

I think that the Seed Enterprise Investment Scheme (SEIS) relief can help.

I speak to lots of female founders at the very early stages of their business. They’re not aware of SEIS, which can make it less of a risk for angel investors and means it is more likely they secure investment at the earlier stages of the business.

Then there’s the StepUp programme and Virgin Start Up, which are brilliant at really getting businesses that haven’t fully taken off the ground and communicating the different funding options and routes available to them.

Sarah Turner:

There are loads of grants around from organisations like Innovate UK if you’re doing technology. Virgin Start Up is one of the partners that issue start-up loans.

There’re relatively low-interest rates for early-stage companies.

But I think before you go and speak to investors, they will expect to see traction and business progress.

I always advise founders to get as far as possible under their own steam because their negotiating position with investors will be much better.

They’ll be more attracted to your business because there’s more evidence that you can show them that you’re a high-growth business, and you’ll get better terms.

How can you get more pitch practice?

Sarah Norford-Jones:

Something to mention is accelerator programmes and pitch practice events. Yeo, my company, got invited to take part in CyLon, a cybersecurity accelerator, in 2019.

The value that we got from that was extraordinary because not only did they help us hone our pitch and how to present what investors were looking out for, they put us in front and gave us access to investors, as well as a sounding board.

We got to bounce ideas off from that experience, and we completely pivoted our business.

We were setting out to be a consumer-focused product, but we realised that there’s a lot of need for a business-focused product because of that experience.

So, we pivoted during that accelerator.

CyLon were great. My advice is to apply to accelerators and pitch-practice events, as often free to use them.

It is a bit nerve-wracking standing up in front of a massive crowd of people and pitching, but it does give you that boost where you think, “Actually, I got this. I can go into a room and do this.”

Bex Burn-Callander:

It would help if you pitched, again and again, to get better. You cannot learn it on your own, doing it to the mirror. It must be done live, with questions thrown at you that you hadn’t prepared for, to see how you deal with them.

Did you find that it was that live element in the pitch, in the heat of the moment, that honed your proposal?

Sarah Norford-Jones:

Yeah, for sure. By doing it again and again for different people, you get additional questions.

And then you think, “Oh, I’ve got to go back and add another page to my pitch presentation because I haven’t mentioned this, or I haven’t said anything about that.”

So, practice makes perfect.

Rushina Shah:

The pitch events and accelerators are great for networking – it’s like having a team of other individuals and females supporting you and feeling like you’re part of a more comprehensive network.

When you’re running your own business as a sole founder or co-founder, you don’t have that network behind you.

Generally, when you’re looking for investment, you have to try and decide what you want to value the company. You hear stats – like women generally devalue themselves or value themselves less than men or their companies less than men.

It’s good to have a network behind you, to understand what other people are valuing their companies. You hear the phrase, “Say what you are worth and add a tax to it.”

So with valuations, I would always go a bit higher and then negotiate it down.

If female founders who’ve done it before can show other female founders what we’ve raised at this valuation, it is possible to set an excellent example for others.

What alternative funding routes are available?

Rushina Shah:

I decided to reach out to Instagram because I was at the business’s early stage, and I didn’t know what routes were available to me.

I’d heard of things like VCs, but I thought, “Ok, well, it’s too early. I’m not ready to share my business plan with them.”

I had this real passion for setting up the business and progressing it. We had set up an under a different brand name initially to put the product in the market and get traction.

I realised I had to put in all my savings from my time working at P&G, and I knew that would come to an end at some point.

I did not want to have a business plan, and cash flow forecast set, but know I couldn’t run the business if I didn’t have enough money in the bank account.

So I put a post on Instagram Stories.

I just said, “This is my business idea. Looking for investment. Is anyone interested?”

A couple of old university friends who I hadn’t spoken to in about 10 years reached out to me and said, “We followed your journey, and it sounds great. Send us your business plan. We’re interested.”

Two of them were already investment managers, so they had experience in investing in other companies. Then the fourth person was someone I didn’t know at all.

To this day, I’m not entirely sure how they found my Instagram page or how they decided to invest.

Again, I shared my business plan with them, and we had a meeting and went through the whole business idea. They loved the concept and decided to invest.

So, it just shows there are different unique ways in which you can raise funding. It doesn’t have to go through traditional routes.

Sarah Norford-Jones:

We’re doing a seed round at the moment with Yeo, and we’re going to be doing crowdfunding that launches at the beginning of March.

We’re doing a crowdfund not just to raise investment but doing it to build a community. With crowdfunding, you get people that believe in what you’re doing and want to be part of it, so it’s a great route to consider.

Bex Burn-Callander:

Sarah, what do you think of raising finance via social media? That’s very new and exciting.

What are the other creative ways that you’ve seen founder’s access? And are there any caveats that you would like to interject?

Sarah Turner:

I think you absolutely should explore every avenue. Raising investment isn’t easy for anyone unless you happen to speak to the first investor straight out of the traps.

It is a process. You’ve got to be systematic, you’ve got to speak to a lot of people, and you’ve got to target yourself carefully at the people who are likely to invest in you.

I think social media is an excellent idea if you’ve got a decent number of followers because you can start the conversation there and perhaps reach people that you wouldn’t have thought to ask.

But if you happen to know individual angel investors, you should speak to them. If you don’t know any angels, there are hundreds of angel networks in the UK, so approach them.

Most of them are on the UK Business Angels Association website. With crowdfunding platforms, Google is your friend here. You’ve got to do lots and lots of searching, draw up long lists of people to contact and treat it as a project.

I think anything you can do to raise your profile in the media and on social media as you go along. You might have some investors approaching you.

But I think everyone will tell you that it’s a long, hard slog to find the right investors. There are many ugly frogs you need to talk to before you find your Prince or Princess Charming.

Sarah Norford-Jones:

You must get used to hearing the word no. You do develop a thick skin because you get a lot of people questioning and saying, “No, it’s not going to work.” Or “I don’t see it. I don’t understand it.”

At that point, you have to say, “Thank you very much for your feedback,” and move on to the next. You cannot let all the no’s drag you down.

Sarah Turner:

No’s can be useful. It’s better to get a quick “no” than people who drag you along and say, “Oh, we’re looking for this and this,” and you spend a lot of time trying to convince them.

So, a definite no can save you a lot of time. And for a lot of people, you’ll just be too early, or you won’t be a good fit.

But try and get feedback from these people so that next time for the next person you approach, you can be even better.

Sarah Norford-Jones:

Do your homework as well because there’s no point in having an hour-long meeting with an investor or potential investor if they focus on a different stage or only focus or another sector.

You know whether it’s going to be a waste of time because you know if their focus is something you’re offering.

Rushina Shah:

I think my Instagram example was unique, where I got slightly lucky. But I also have had experiences where it hasn’t been so easy.

When I first started raising, I learned the difference between value-adding angel investors and angel investors who are silent partners.

Initially, I wanted value-adding investors rather than silent investors because I knew that although I had corporate experience in the industry I was in, I didn’t have experience setting up my own business.

It was about getting the best investors I could find in my industry category, who could knock down doors and could support the business.

Initially, I had a meeting with one investor, but it took me three years to get him on board. He initially didn’t say no, but said, “I’m interested. It’s maybe. Just keep me updated.”

Every so often, whenever I sent out my share reports and business updates, I would copy him in and say, “Look at this great news, etc.”

Three years later, we had traction and revenue and were starting to progress in the industry – that’s when he came in.

But he came in at a higher valuation when he should have come in at an earlier stage. But it shows that some investment takes a lot longer – it’s not as easy as it does sound.

How do you create a business valuation?

Bex Burn-Callander:

And when it comes to asking for money, how do you figure out how much you need, and do you need to add a bit of ambition to that number?

And over what time frame are you trying to raise that investment?

Rushina Shah:

For me, it was about putting a reliable cash flow forecast together – determining the strategy upfront and planning for it.

It was all around saying, “Where do I want to take the business? Where do I see the business going in the next three to five years?”

You base a valuation on revenue targets, sales that I want to achieve, retailers we want to secure, marketing spend that we need to put in, the promotional plan, and operational costs.

All those things factored in help build a robust cash flow forecast that will be as accurate as possible, although it’s hard to put it together when you’ve never done it before.

Again, this why having value-adding investors in the industry helped because they’ve done it before.

My co-founder ran a snacks company just before joining me, exiting the business a few months before I got him into the business. So, he had that experience, although what worked for that business wouldn’t necessarily make sense for my business.

The cash flow forecast helped me to determine what funding the amount that we needed. And then, in terms of the valuation, it was all about, what are other brands in my category doing at the same stage?

I looked at that with caution because we should have a unique valuation if our brand is unique. It’s not just around what we could achieve in terms of revenue and profit.

It was also about me as the founder, our experience, the support behind the business, and the unique white space opportunity that we’ve identified.

So I bumped up the valuation due to that, which was great because it meant that we had some negotiation room when we talked to investors, but also because they believed in that valuation after I justified it.

We ended up securing it.

I had my co-founder a couple of times looking at me being like, “How did you get that valuation?” And I just said, “Well, if you don’t ask, you don’t get” So we went for it anyway.

Bex Burn-Callander:

And Sarah, what was your approach with Yeo? As a technology business, you have a different direction without a manufacturing base.

Sarah Norford-Jones:

Most of our costs go on developing the product. Good developers come with a price tag, so that’s what we forecasted.

Now, we’re running a small, linear and tight team. But to grow and launch the way that we want to, we need to bolster up that team, so that’s where we start looking.

You look at developers’ salaries and what they cost when you start building your cash flow forecast projection.

To mention, raising funds takes time, so you need to give yourself the right runway before you run out of cash, knowing that it could take up to sometimes six to eight months before you even raise the investment that you want.

It’s useful to kind of plan ahead for that.

And in terms of evaluating our business, look at what others are doing out there, and try and go as long as you can without taking on funds.

Right now, we’re running two paid pilots with businesses. That just proves your product-market fit. It’s proving to investors that there is a need, there are people who want it, and that people will pay for it.

So, if you have time, make yourself more appealing and more valuable to the investor.

Sarah Turner:

From an investor’s point of view, there’s a tremendous amount of emphasis on the pitch, but you are wasting your time if there isn’t a detailed plan behind that, especially around the financials.

How much money do you need to get to this point? You might be profitable by then, so you won’t need to raise more money.

As investors, you expect to see clear thinking about the people you’re going to need, financial forecasts, and your marketing plan.

What’s the technology roadmap? There’s a whole lot of information that needs to go in there.

Early stage valuations are tricky. It’s more about art and experience than science because we’re not looking at companies with predictable revenues.

You base valuations on forecasts, which with the best will in the world are best guesses. You will be looking at companies around you, companies at a similar stage, and companies from the UK market rather than the US.

Be bullish, but if you go in with something outrageous, you run the risk of just not being credible. So, people will say no straight away.

The other factor about valuation is that it does set expectations for where you’ll be pricing yourself in the next round.

If you’re getting a high valuation, you have to be super confident of making yourself worth that valuation and more in the next round. Otherwise, you are just creating problems for yourself.

It’s quite a detailed thinking exercise that you’ve got to go through.

Delay chasing funding as much as you can

Rushina Shah:

I think you both made an excellent point on delaying the funding as much as you can because, as you said, you can value the company higher if you’ve got more traction and you’ve proven the concept in the market.

And there are ways in which you can get money for the business without going to external sources. I didn’t know about research and development and tax relief when I started my business.

So in my category, food and drink, many people think research and development don’t apply, and you can’t get tax relief based on that.

But at the early stages, when we weren’t making much money, I ended up getting tax relief for about £10,000, which was a lot of money at that time.

It shows that there are other options available to you before you need to raise funds.

Sarah Turner:

Customer revenue is fantastic, even in relatively small amounts, because it proves that people are willing to pay for it.

Even if you’re building a technology product and you have to go through various trials, you might be able to make money.

You might get customers to pay for doing the trial or at least your time during the implementation, which is non-diluted funding. The best source of financing you can get is money from your customers.

Put your savings into your business as a director’s loan

Rushina Shah:

The other piece of advice that I got early on was to put the money we had in our savings into the company under a director’s loan.

That might sound obvious, but I think many entrepreneurs don’t do this.

You can’t eventually take that money back if it’s not all written down adequately documented. That’s important for those who are setting up now when starting and getting off the ground.

Bex Burn-Callander:

I love that these are all things that you figured out through building your businesses and possibly wish you’d done earlier. That point about the tax credits, can you backdate it?

And if so, for how long? We might have founders who think, “Oh, I didn’t do that – I spent all that money a couple of years ago.” Can they still claim?

Rushina Shah:

If I’m not mistaken, it’s three years that you can backdate it, and your accountants should be able to help you. It’s an official report that you put together.

If anyone needs any guidance, I’m happy to help. Anyone can drop me a message on LinkedIn.

Build a tribe – people who can support your business journey

Bex Burn-Callander:

We’ve talked quite a bit about investment and finance, and I think it’s a vast and essential topic. But people also contribute to business success.

I hear a lot these days about having a tribe – having people who are at the same stage as you who are doing a similar thing and powering each other through that experience.

Rushina, I know that you had a buddy in building your business. Can you talk to me a bit about that and how that affected your ability to be competent and grow faster?

Rushina Shah:

Going from a corporate world where you have lots of people around, you’ve got a team and routine. It is a massive leap when you then go into the world of starting up your own business.

You realise it’s you that’s pushing the business on a day-to-day basis. It was essential to be surrounded by other people who were set up their businesses from scratch.

The food and drinks industry is excellent because people are supportive, they answer your questions, and they’re so many mentors around.

I also thought about approaching entrepreneurs outside of my industry to get a fresh take on entrepreneurialism and different business ideas.

Initially, I started going into a co-working space called Google Startup, free of charge for anyone to go in. I started talking to people around there.

I had a friend called Lisa Doole. Both of us had launched our businesses, although she was in the tech space.

We both were going through breakups, which helped us bond slightly. She was also going through the same experience of needing to be motivated and getting into a routine.

It was great that we would say, “Right, we’re both getting into the office at this time.” And if I have a question which I needed answering, I could go to her for support.

She was my work wife or whatever you want to call it during that time – the equivalent of what you have in the corporate space. She was brilliant.

Bex Burn-Callander:

And to the Sarahs, talk to me about your tribes. Have you built them? Did you need one? Who did you have? Who had your back?

Sarah Norford-Jones:

Some of my friends have started their own business. There’s one in fashion that runs her accessories and handbag line.

There’s one that’s revolutionising football and the football world – she’s a woman business owner in football, which is unique.

We all support one another, even to bat an eye, “Oh, I’ve got this talk. Can you give me some pointers?” We have a sound support system between us.

It’s just lovely and inspiring to see your friends that you’ve grown up with or been around for so long, paving the way, doing things for themselves and creating their businesses – being a success.

Sarah Turner:

From my perspective, I have built a new tribe and turned it into a business, finding women and men who have the financial capacity and professional expertise to the right investors and help them on that journey.

I am helping them avoid some of the mistakes I’d made on my journey and built a community out of them. My business is my tribe.

But when I’m speaking to female founders, having a tribe and peer mentoring is huge.

I think it’s crucial if you can have a co-founder in the business. Somebody to share the strain with. If you get sick, you know there’s somebody who’s able to keep things going while you’re out of action.

But I think to have people outside of your business that you can share the experience with is vitally important as well.

You’ve got to act strong for your team all the time. You can’t always talk about these things in front of the people who work in your business. So that outside support is vital.

Also, that group of people will hold you accountable. You can say, “I’m going to do this.” And then they will ask, “Well, did you do that?” That’s important in terms of spurring you on to be even more ambitious than you might be on your own.

What tough personal questions could investors ask women?

Sarah Norford-Jones:

As a woman, there is the elephant in the room that maybe one day, we want to have a family and become pregnant.

I gave birth to my son at the end of 2019, and during that time, we were raising funds and going to meetings and pitching.

I am fortunate enough to have a co-founder in my father there as a support. I think it is vital that you can partner up with somebody.

There is a massive value in that.

I have a friend who’s doing it by herself. She is in the beauty industry, starting her own business, and pregnant.

She doesn’t have anybody that she can turn to and say, “Oh, my gosh. I don’t feel like going to this meeting today. Can you do it?”

She’s been advised to put the business on hold until she can dedicate more of her time to it.

Sarah Turner:

I think it’s an important topic. Many stories are floating around of women refused funding because they’re pregnant, or they’ve got families or asked questions about their plans, which a man would never get.

From a female investor’s perspective, we’re quite sensitive to the issue that the questions don’t come up.

But if we were to see a heavily pregnant founder, we would want to understand what networks they have around them – not just in the business but at home, so that they can take time off when they need to.

It is possible, and there are loads of good examples of women raising money when pregnant.

But it’s again about having a plan and convincing people that it’s a strength and asset to the business rather than a weakness and that their money will be in safe hands with you.

Sarah Norford-Jones:

I would address it head-on and say, “Yeah, I’m pregnant, and this is the plan.” I wouldn’t even give them the option to ask, “So what are you going to do when you have this baby?”

You’re just going in with, “This is the plan,” and taking action before it even becomes a topic.

Sarah Turner:

If you come across male investors and, frankly, women investors, for whom it’s a problem, they’re not the right investors because they don’t believe in you. So, move on.

Bex Burn-Callander:

I love it that we’re talking about this, though, because it is a complicated topic.

It is a significant change for women and men when a baby comes into the world, which becomes their priority. And you must talk about it in a way that protects everyone’s interests, understanding that it’s a huge new responsibility.

Rushina Shah:

The investment that I declined – one of the big reasons was that they only acknowledged me to ask about my future.

And it wasn’t necessarily directly asking about, “Are you planning on having children?” But I got that feeling, that vibe, that that’s what they were getting to.

I was thinking, “Well, how come you do not ask me about my co-founders future?” I think that’s when my gut said to me, “This isn’t right.”

Sarah Turner:

Sorry to jump in, but it’s just unbelievable that they didn’t find you engaging in the business.

So, they thought you were an accessory, but somehow when it comes to having plans for a family in the future, then suddenly you’re essential.

Bex Burn-Callander:

I don’t want to pry because it’s no one’s business if you wish to have kids or whether you’ve got kids. If you’re in business, it’s about your business and your plans.

But I am interested to know, for example, if it’s come up and if it’s something that has ever been a factor in your planning?

Either Sarah Turner or Rushina Shah, have either of you come up against that, like something you look at either in your present or your future as a barrier?

Rushina Shah:

It’s not been such a focus for me. I know that I want to take the business to a point where we exit. And I’ve got in my mind when I see that exit point happening.

If I end up wanting to have children before that happens, I think I would have built the business to a point where people know that I’ve got enough skin in the game actually to want to continue it.

I’ve put in enough time and effort into the business to not just give it up at the point when I then have children.

It’s never been something that’s crossed my mind in terms of the business’s planning and future because I already see an end point and an exit plan, which hopefully will come up before I’m ready and wanting to have children.

But I guess it has come up in conversations with investors. Not in such a way that it’s directly linked to, “Are you going to have children?” It’s not so direct, but it is like, “What’re your plans for the future?”

I have addressed it. And again, it’s all-around reassuring that I do have an exit plan, and I have a lot of interest and shares in this business. I’ve essentially put my savings into the business.

So I know that I’m not going to give this up at any point. I think it’s making investors confident that I believe in the business, and nothing will hinder that.

How can business culture support families and flexibility?

Sarah Turner:

Culturally, we’ve got to think a lot smarter about this because having a family isn’t something that affects women. It affects most adults. Male and female.

Yes, the woman must carry the baby, but I think we’re all growing businesses that will be employing men and women.

We’ve got to embed it in those businesses’ culture so that it works for everybody, and we can offer that flexibility, not just for ourselves as founders, but for our teammates.

Bex Burn-Callander:

Thank you. I’m sweating asking these questions. It is hard to talk about this without feeling like it’s awkward or you’re prying.

I don’t know how it must feel when it’s you in the hot seat, having questions directed at you about planning for the future that you don’t even know 100%.

I’d say that I didn’t know when I would have kids.

Sarah Norford-Jones:

Let’s talk about creating a culture and an atmosphere within your company that appeals to both male and female.

I’m the only woman in my company at the moment, so I am paving the way. I would like to make it more appealing for women to start working with us as we grow.

It’s embedded in me that I would like to ensure that wherever we end up, we allow for families. Maybe there’s childcare or places for breastfeeding – a particular room and not a tiny little toilet in the back.

I want to make the business appealing for women, especially in the tech industry, as it is very male dominated. It’s an afterthought for many companies, but I want to start paving the way.

Bex Burn-Callander:

We need more women at the top because they can make more inclusive decisions.

Sarah Turner:

COVID has disrupted the whole model of people going to work every day to a place. We can rethink work flexibly, so it works around people’s lives.

Whatever it is they want to do, such as look after their family.

Bex Burn-Callander:

Absolutely. I think there’s a point about cultural change. I read a lot about how women do more domestic duties. It’s hard to make generalisations.

But more women seem to be doing more around the house – more caring responsibilities, whether that is elderly parents, shopping or remembering to send the birthday cards to the extended friends and family.

A lot of that seems to be covered by women, and I think it’s going to be interesting to see if that changes over time.

Sarah Norford-Jones:

Well, we are good multitaskers. I think that’s one thing that I’ve learned: being a founder of a business, you have to be an extraordinary multitasker.

Sarah Turner:

Yeah. I call that the cognitive load. It’s thinking ahead on behalf of the whole family and household and the business.

To add to what Sarah is saying, I believe that those female skills around empathy and communication and handling lots of different things at once are considerable assets in running a business.

Sarah Norford-Jones:

I don’t know about you, but women tend to be a lot more intuitive than men. Maybe that’s generalising a bit too much. But they do tend to be more in tune with that gut feeling and going with their gut.

Just as Rushina probably turned down the VC fund’s investment, I think we listen to it a lot more because of a gut feeling.

Even some of the men in my company come to me, and they ask, “Sarah, what’s your gut telling you?”

They want to know because I’ve based decisions on that in the past. And if I haven’t listened, that’s when I kick myself down the line because I say, “Oh, I should have listened to my gut.”

Bex Burn-Callander:

I suppose the message here is that there may be some systemic barriers. Still, they are slowly crumbling away, helped along by people like Sarah Turner and the excellent Angel Academe.

It’s never been a better time to be a woman who has all the skills to run successful businesses and build the unicorns of the future if they want to. I think that’s probably the right place to stop. Thank you all for joining me today.

I think we’ve had so many practical insights on pitching, raising investment, all the routes open to you, but also on all the things that move around that when it comes to being a successful female entrepreneur.

We should celebrate great entrepreneurs, both female and male, every day. That’s very much the ethos at Sage.

Audio transcript may have been edited for legibility and coherence.

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You can follow Sarah Turner at @Turnipshire, Rushina Shah on Instagram, and Sarah Norford-Jones at @Sarahjnj