Raising Finance: Overcoming the Barriers Created by Stereotypes
Frugl founder Suzanne Noble talks about the challenges of raising investment as an older woman in business…
I launched Frugl, a London-aimed bargains and deals platform for people on a budget, back in 2014. In this age of austerity, it was an idea I truly believed in and backed it with my own risk, funding our initial app by selling my house.
One year on and we now have close to 20,000 active users, regularly list more than 200 activities per month and have just launched a marketplace for small and medium enterprises and event promoters to list and manage their own events and offers.
We are ripe for growth, which is why I am crowdfunding new investment using a platform called Syndicate Room (SR). This, however, is not without potential pitfalls such as finding investors, revising and adjusting financial forecasts and spending a lot of time in meetings.
Today’s funding environment
The idea is companies have a minimum 25% investment already secured and SR pools their network of investors for the remaining money. This is our first Seed Enterprise Investment Scheme (SEIS) round but in reality most early stage businesses using crowdfunding require 40% or more of their investment committed in advance or they risk failing. We had 45%.
For well-known brands, crowdfunding can be a great PR exercise, raising awareness and inspiring loyalty among existing audiences. But for us it’s an opportunity to become a bigger concern, define a longer roadmap and expand to new cities.
However, despite government efforts to help early stage businesses through the creation of SEIS and Enterprise Investment Scheme (EIS) tax relief schemes, there are simply not enough angel investors to tempt into parting with their cash.
On Syndicate Room, I am one of three businesses founded or backed by women. According to research in the US conducted by Babson College, only 6% of female-founded start-ups raise investment. That has to change.
David Cameron has named Anna Soubry his Minister for Small Business. If the Prime Minister has faith in a woman, perhaps attitudes will soon change.
Overcoming the ‘older entrepreneur’ stereotype
But whether you’re a man or a woman, funding a business is serious business. An angel is only going to invest in a start-up that shows clear signs of promise and return. When you are of a certain vintage however, the other issue is perhaps people think you have less drive to succeed.
Thankfully that is not true and this has recently been recognised by Google’s Campus London, which has launched a new Founders Over Fifty programme and I am part of the first cohort. While we may have more miles on the clock, that brings important life and business experience. In the 25 years since I started my first business, there has been a seismic shift in the way money is lended.
Raising investment the second time round
When I ran my own Top 150 PR agency, we had an overdraft that was in the six figures and regularly hit our limit. We had one bank meeting to secure the funds and the following week, the facility had been agreed. Nowadays, that would be unheard of. In the mid-90s, a friend and I gained marketing funding for a business from the EIS created by the DTI with just one phone call from our accountant and a simple business plan.
Since launching Frugl, we have received a grant from Innovate UK and a government Start Up loan organised through Virgin StartUp. The grant, awarded via a lottery system, enabled us to create a piece of bespoke technology that saved us hours of research. The Start Up loan, on the other hand, took three months, a huge amount of hoop jumping and the belief of our loan manager to secure.
At networking events I see 20-somethings discussing their current or future rounds of fundraising like a rite of passage but equity-based investment is hard to come by and doesn’t always come naturally to a first-time entrepreneur. The technology sector is littered with war stories of those whose funding eventually fizzled out or worse, the start-ups who treated the money as if they’d won the lottery.
In my experience, establishing trust with potential investors and institutions is key but it takes far longer, and it is far harder, than it may appear. You must carefully consider whether you’re prepared for what you’re giving away and for all the hard work going forward. You need to show demonstrable traction and revenue, and you need to look at all the options.
It’s your idea, your business and your neck that is on the line if you don’t fulfill your promises. Thankfully, when you do achieve your goals, it will all be worthwhile!
To find out more about Frugl and its crowdfunding using Syndicate Room, visit https://www.syndicateroom.com/frugl.