To win over investors, a well-crafted pitch is no longer enough. Nowadays, start-ups have to prove their long-term profitability. The experts at AURIS Finance, a consultancy specialising in mergers and acquisitions, give you their advice.
Using data management to successfully raise funds
Innovative French companies, which have long been spared by the downturn, are now finding it difficult to raise funds. In the first six months of 2023, the amount of money raised by French start-ups fell by half compared to the first half of 2022, according to a report by French Tech Finance Partners. To attract business angels, development capital funds, private equity funds, and large corporations, a clever idea is no longer enough. The product or service offered by the start-up must be innovative and disruptive to its market. Beyond these imperatives, what investors are looking for is the start-up’s ability to anticipate the evolution of its profitability in the short, medium, and long term.
Data-driven approach
At a time when the number of companies seeking funding outstrips the amount of money available, it is essential to attract the attention of investors. A medium to long-term business plan is not enough. To convince investors of the relevance of a funding package or a sale, start-ups need to show their backers how they manage their data. Margin planning, the ability to control the business and plan sales are all reassuring factors for potential investors. To achieve this, many innovative companies look to the strategies already in place within large corporations. The finance departments of listed companies have been using data management for a long time now. Far from simply recording past transactions, the role of the finance division is now central to a company’s strategy. Finance professionals play a real role as business partners to executive management. With figures to back them up, they anticipate changes in the business and set the direction for the company’s future.
Protecting investor confidence by thinking ahead
In recent months, the development of artificial intelligence has made it possible to improve management tools. For example, a forecast can be challenged by various scenarios that take into account the occurrence of health, macroeconomic or geopolitical risks. It is these risks, which are particularly worrying for investors, that need to be quantified. Innovative companies that embrace data management are demonstrating their ability to run a model over the medium and long term. To achieve this, a planning strategy must be put in place. This will determine what data needs to be collected and how it will be used. In practical terms, if you want to forecast future sales, it is essential to make the entire sales team aware of the need to collect useful data. You will then have to put in place the tools, managed by the finance department, that will enable you to provide reliable statistical data. This will enable you to provide investors with a complete picture of the current and future sales situation.
Get the support you need
Against a backdrop of shrinking liquidity, storytelling is no longer enough to raise funds. You have to be convincing, with numbers to back your claim up. While advances in artificial intelligence mean that a myriad of data can be exploited, the presence of a human being to select the useful data is more important than ever. AURIS Finance’s experts are specialised by industry. They can help you develop a data-driven planning strategy and assist you in your search for funding.
