– Anthony is CEO and Co-founder of SeedLegals
With Covid restrictions tightening and the government instructing all companies to ensure their employees work from home where possible, it’s clear the challenge for businesses is far from over.
At SeedLegals, we’ve seen the varying degrees of impact on start-ups and businesses across the UK. Many are under increasing pressure, while others are thriving and growing as we adapt the way we live. Both scenarios, however, mean more businesses than ever will be seeking investment to either replace declining revenue or support growth and help to navigate an increasingly uncertain economic future.
This investment will provide crucial support for both the economy and the startup ecosystem, and access to investors and platforms which support funding rounds has never been easier for entrepreneurs.
But the same cannot be said for investors. With increasing demand for their time, funds and experience, choosing the right investment and managing deals has never been more challenging. From the influx in approaches, learning to network virtually and choosing businesses that have the ability to adapt to a volatile economic climate, the landscape for everyone has changed.
Just like businesses, investors need to adapt too. As the largest closer of funding rounds in the UK, we’ve taken a look at some of the challenges facing investors right now, and how they can tackle them.
- Capitalise on virtual networking opportunities
Whether you loved them or hated them, pre-Covid, networking events were invaluable. But with everyone advised to work from home for up to six months and large conferences postponed or cancelled, we’re not going to be seeing physical events again anytime soon.
In their place however, the virtual conference has arisen. Like many other things, networking has gone digital. Zoom conferences run by companies like SaaSGrowth and Informa Connect offer investors multiple opportunities to connect with entrepreneurs in an informal way, helping them make decisions about whether to progress conversations.
LinkedIn has also emerged as one of the most valuable social tools in an investors’ armory – the networking platform has reported a 25% growth in user sessions. These aren’t just people looking for jobs – with over 690 million members, LinkedIn is the perfect place to connect and engage with new prospects.
In this new world, it’s important we share information amongst us too. I have personally taken to using WhatsApp as a networking tool – it’s great to be able to chat to groups of similar people, across different industries, who can share tips, advice and challenges they are facing in a quick and informal way.
- Manage your deal flow
If the economy is to recover from the recession we find ourselves in, it will be vital that businesses receive the funding they need.
Start-up and scale-up businesses face the added pressure of needing to continue to grow their business while adapting to an ever-changing landscape. Many have been catapulted into hypergrowth as a result of the changing consumer and business needs.
However, the process of arranging investment with multiple seemingly worthy businesses represents a hugely arduous administrative task. This was true before lockdown, but is exacerbated by the current norm of employees either back on furlough or working remotely.
With an inevitable upcoming clamour for investment, investors need to be mindful and ensure they are not overwhelmed by the huge number of potential opportunities.
We recently launched a new product for investors, Deal Manager, which has been specifically designed to solve this issue. Investors can build their investment proposal, generate term sheets and legals and review, share, agree and sign everything they need online.
It aims to speed up the process of closing a round for investors by eight times, keeping everything in one place and taking all the interaction online to reflect the world we currently live in.
- Identify businesses with opportunity for growth and longevity
Adaptability is a particularly important quality right now. This might seem obvious, but with such a volatile economic landscape, it is imperative that investors identify businesses which have the ability to adapt to change.
While many businesses have been catapulted into hypergrowth, it might be tempting to invest in a business which is thriving in the current climate with the potential for immediate returns.
However, considering how the business will fare when we do eventually return to ‘normal’ will be key. Can it adapt just as easily to the needs of its customers without the restrictions currently placed on us? Will people even want it? And when things become ‘normal’ again, will the business still have the capacity to grow at the same speed?
That’s a vitally important consideration.
While objectives will differ from investor to investor, short-term planning is a privilege few are privy to in the current climate, so looking at longer term investment strategies is the only smart move for investors.
- Make reasonable valuations
Covid has seen millions wiped from, and added to, businesses. This makes valuations increasingly difficult.
Traditional methods of reaching a valuation – cash flow, net assets and EBITDA – are hampered by the uncertain, changing landscape and while many investors and industries will have general rules of thumb, many of these may not be applicable at the moment.
Taking into account things like assets, profits and cash flow remain, but one of the most important assets now is the potential for adaptability and growth beyond Covid. This means that choosing the ‘right’ business to invest in is even more important.
At SeedLegals, we’ve seen thousands of funding rounds take place, with clear trends in industries like Healthtech and Edtech. These are not only valuable in the short term, but have the scope to change the way we operate in our hospitals, schools and universities in the much longer term.
GOING GLOBAL: 7 TIPS TO GET STARTED
The idea of selling your products or services to new markets across the globe is an attractive prospect for any business, large or small. But while reaching new customers and unlocking the potential for further growth can seem exciting initially, adapting your business to foreign markets is no small feat. Factors such as cost, communication and cultural differences can all affect your business’ success when going global. This guide will explore some of the key considerations to make when you’re thinking of expanding your business overseas.
Evaluate Your Finances
One of the main questions to ask when looking to go global is whether or not your business can afford to do so. Crossing borders can be a complicated and expensive process which can take away time and resources from other opportunities at home. Growth for businesses abroad is often a slow process; establishing products and services in other countries takes time, so you will need to factor this into your planning. Thorough analysis of domestic and international markets should always be undertaken before making the decision to expand your business overseas.
Location, Location, Location
Choosing the right location is crucial to the success of your business expansion. International business network Going Global Live says that taking your business to the right countries initially can save you money on excessive marketing and advertising, putting you face-to-face with your target market from the outset. You should weigh up the pros and cons of potential locations, such as the likelihood of being able to fill your new HQ with prime, homegrown talent, as well as access to desired markets aided by foreign investment bodies. It is also important to consider the relevant laws and regulations laid out by national and regional governments.
Ensure You Have the Right Infrastructure
Making sure your business has the right infrastructure to handle expansion abroad will put you in a good place going forward. Implementing a clear management strategy, both locally and centrally, will set your business up for a smooth and successful launch overseas. Having up-to-date IT and communications systems at the centre of your business will allow you to share information and data securely. When it comes to shipping, choosing the best – and most efficient – transport and storage providers will give you the peace of mind that your products are safe in transit. Companies such as S Jones are ideal for businesses looking for more information on storage solutions for shipping overseas.
Build a Strong Team
Appointing a strong team to oversee your expansion is crucial to your company’s success in new markets. Hiring people with a good knowledge of your target market, as well as a focus on your business’ interests, is key when establishing your overseas HQ. Working with local partners can help you to communicate your business’ unique selling point in a meaningful way. Having an experienced partner or mentor that you can trust to oversee the expansion will allow you to stay focused on the bigger picture and ensure that your attention isn’t taken away from your core customer base.
Once you’ve made the move to globalise your business, be sure to have faith in your ideas and don’t be deterred by slow progress. Dr Shai Vyakarnam of the Cranfield School of Management says that while there is a fine balance between faith and stubbornness, you’ll need “incredible levels of self-belief and faith in your idea” to succeed, and that you “only need to be able to turn a few key people in your favour and the others will follow”. Making well-informed decisions quickly will allow you to stay on track and will nullify the threat of any lingering self-doubt. While progress may be slow at first, be sure to remain patient and be prepared to build personal relationships to gain the trust of your new partners and customer base.
Consider the Impact of New Ideas
When implementing new ideas for your business as whole, consider how they will be received by your new international customers, as well as by your existing customer base at home. What might be seen as a positive idea in your home country could be perceived as offensive or alienating by your customers abroad. Factors such as differing time zones, languages and cultural appropriateness should always be taken into consideration when making key decisions to eliminate the risk of alienating foreign customers and damaging your reputation overseas.
While it is important to have faith in your business and be patient initially, you should also be willing to make changes as things develop. Acting on the advice of experts is key to navigating new markets successfully. It may be that your products and services require innovation to meet demand, or that cultural differences lead you to make changes to your marketing strategy. Being adaptable will give you the best chance of meeting consumer demand on a global scale.
When trying to expand your business to an entirely new customer base, try to bear in mind some of the above points. As long as you remain patient and open-minded, then you should have little difficulty in marketing your business globally.
Homepage, S Jones Containers, https://www.sjonescontainers.co.uk/
‘7 Tips for optimizing international business communication’, 99designs, https://99designs.co.uk/blog/tips/tips-for-optimizing-international-business-communication/
‘Going Global: How To Expand Your Business Internationally’, Business News Daily, https://www.businessnewsdaily.com/8211-expand-business-internationally.html
‘Going Global Means Thinking Global: 8 Tips to Consider’, Cranfield School of Management, https://www.google.co.uk/amp/s/blog.som.cranfield.ac.uk/blog/going-global-means-thinking-global-tips%3fhs_amp=true
‘Our Top Tips for Going Global…’, Going Global Live, https://www.goinggloballive.co.uk/news/blog.asp?blog_id=21679
REDUCING FRICTION ONLINE HAS BECOME BUSINESS CRITICAL
Andrew Shikiar, Executive Director at the FIDO Alliance
The global pandemic has pushed the importance of remote access and authentication right up the agenda for many businesses. All those occasions where people would normally show up in person to open a bank account or pick-up some high street essentials were simply not possible for large parts of the year. Even as restrictions have eased across the country, these kinds of face-to-face transactions remain an unappealing prospect or a last-resort to many.
Not surprisingly, this has led to unprecedented demand for online and remote services. This brings with it a host of challenges and opportunities, and we have seen many examples of companies brilliantly adapting and reacting to this new way of life. But one issue that businesses and individuals have been grappling with for years – that of frictionless transactions and authentication – has now been put under a brighter spotlight as it is increasingly critical to get right.
Friction impacts the bottom line
The core challenge facing businesses is how to strike the right balance between giving customers the best possible experience of online service, and the necessary regulatory and security implications that directly affect – and often contradict – that ideal user experience.
We’ve all likely experienced the very real kinds of friction I’m talking about – it’s the account you gave up on registering for, or the purchase you abandoned because the process was just too frustrating.
Friction like this has direct bottom line impacts through the loss of sales and/or disaffected customers – and it is substantially more pronounced in the current climate. People have less money to spend, they are spending a greater proportion of this reduced pot online, and businesses are competing for their livelihoods to claim their share. Providing a frictionless experience can be the difference between success and failure.
Banking and retail lose out
Nowhere is this problem more keenly felt than in the retail and banking industries. Countless transactions simply don’t happen each year due to issues with passwords or mobile One Time Passwords (OTPs) at the point of signing-up or checking-out.
Data from Statista shows that 69.57% of digital shopping carts and baskets are abandoned and the purchase not completed. And Mastercard’s analysis estimates that up to 20% of mobile e-commerce transactions are abandoned or otherwise fail (e.g., from undelivered SMS OTPs) mid-way.
In addition, independent web usability research institute Baynard found that one out of five consumers abandoned their online shopping carts citing the checkout process as “too long and complicated”. That means 20% of customers taking their custom elsewhere, likely to a competitor, because the process presented too much friction.
Passwords are a major part of the problem
Organisations have struggled to strike that balance between frictionless yet secure online log-ins in large part because of historical dependence on passwords – which simply aren’t fit for purpose in today’s online economy. Passwords were designed to be simple but, as we can all likely attest, they have become incredibly cumbersome and difficult to manage.
The demands placed on consumers to remember and keep track of the array of different passwords they need, and the different requirements of password complexity which varies from provider to provider, is proving to be untenable.
Not only are passwords a major cause of consumers giving up on purchases or preventing them from signing up for new services, but they also fail in delivering on their primary objective: to protect accounts and sensitive data. All too often the password has proven to be a single point of failure, and one that is all too easy for hackers and fraudsters to get hold of – a trend accelerated by the coronavirus pandemic.
There has been a move toward developing and adopting open standards that enable any online service provider to authenticate users in a way that is both highly secure and almost completely frictionless – with all major platform and cloud service providers coalescing around a common approach.
It’s clear from the way consumers have embraced using their fingerprints and FaceID to unlock their devices that simple, natural gestures work – and that they are often preferred over using a password. By adopting the latest authentication standards, organisations can enable their customers to use these same easy gestures on their every-day devices to prove their identity and approve even the most sensitive of transactions.
The standards also improve security by moving away from the traditional model where your password or similar piece of ‘secret’ information is stored on a server, to one where credentials are stored on an individual’s device. This means they cannot be phished or divulged through other means of social engineering, while also inherently stopping the large-scale breaches that impact millions or billions of users in one go.
Due to these developments, the kind of poor user experience that leads to abandoned shopping carts and lost customers during the sign-up process is completely avoidable. There is now nothing stopping banks, retailers, and a range of other businesses from offering a superior, and low-friction user experience while also maintaining the safety and integrity of the networked economy.
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