How to raise investment in the USA: guide for UK startups
Want to attract US VCs? US legal expert Daniel Glazer of Wilson Sonsini explains what US investors look for, when to do...
SeedLegals is now the market standard for UK funding rounds. After getting an increasing number of requests from founders for a “Powered by SeedLegals” slide to add to their pitch deck, we decided it was high time to make one available here.
We commonly see slide decks that do a brilliant job describing the product, market and team, but then fail to tell investors what the founders are looking for. So this slide gives your investors the key information to turn “I’m interested” to “I’m in!”.
Make your own deal summary slide or download the SeedLegals Powerpoint template.
This deal summary slide is essentially an overview of the core investment proposal and makes it easy for investors to see at a glance how much they can invest and whether they can claim SEIS/EIS tax benefits. Crucially it also shows that the founder understands the investment process.
This one is crucial. Setting a realistic target raise is a great signal to investors that founders can set achievable goals and milestones. Investors know that raising too little means you’ll be fundraising again in the near future which is a huge distraction for a founder and also means they’ll be getting diluted soon. On the flip side, planning to raise too much can signify an unsustainable valuation, and unrealistic expectations about investor appetite.
As a rule of thumb, always plan to raise enough money at each round to last 12-18 months. Read more on deciding a valuation, and how much equity to give away to investors.
SEIS / EIS Eligibility
With 8 of 10 angel investments being made under SEIS / EIS, it’s the core driver of the UK startup investment ecosystem. If your business qualifies, SEIS / EIS allows investors to claim back up to 50% of the investment they make in your business in tax relief, making it an attractive investment. Some investors will want to see proof that your business qualifies, which you can demonstrate by obtaining Advance Assurance from HMRC. Apply for Advance Assurance directly with SeedLegals.
Increasingly, early stage investors are diversifying their portfolio and investing in syndicates or groups. This means that the amount individuals are investing per company is decreasing, and the number of investors in each round is increasing. By setting a minimum investment and demonstrating you’ll accept smaller amounts you can make it attractive for smaller investors too. Whereas in the past it may not have been worth the time and expense of investment paperwork for investors to make smaller investments like these, platforms like SeedLegals now make it quick and easy for multiple investors to join a round, without the reams of paperwork, legal expense and time investment.
Since early stage investors will usually be minority shareholders (with the founders owning the majority of the company), the term sheet will usually contain a number of clauses which serve to protect the investor and give them certain rights. Including a top level view of these in the deal summary slide can be a great way to show they’ll be included in the investment paperwork too.
Finally.. You can make a deal move even faster by making sure you’ve done this before you start pitching to investors:
Companies House Check
Demonstrate investment-readiness is by ensuring Companies House filings are correct and up to date. Up to one third of early stage companies have inconsistencies filed with Companies House and these can often hold up the investment, or even collapse negotiations altogether. Usually, the number of shares or ownership of the company is inconsistent with the cap table records. When this happens it can signal a huge red flag to investors about the state of company record keeping. You can request a Companies House check through SeedLegals concierge service. Just hit the chat bubble to talk to one of our experts.