Roy Lipski: To successfully find funds, know your goals and be open with potential investors

By Roy Lipski

No matter how large or small, no matter its business focus, sooner or later every company is going to need to raise funds. The Oxford Catalysts Group — a science and technology-based company formed by the 2008 merger of the U.K.-based catalyst development company Oxford Catalysts Ltd. and Velocys Inc., a company based in Plain City, Ohio, that specializes in microchannel reactors — is no exception.

With a successful $45.5 million fundraising campaign to support further development and commercialization of smaller-scale gas-to-liquids plants completed, the experience has taught us a lot about how to capture the interest and attention of potential investors.

But although technology is the name of our game, whatever your business focus and funding needs, there are lessons you can learn from such an experience. After all, the process of raising fund is as much a science as an art.

Here are my top tips:

Before you start: consider what you want to aim for and whom you want to attract

You need to develop a good portfolio of investors. Aim for a mix of large and small investors. You also need to think about the types of investors you are seeking. There are two main kinds.

Financial investors are the ones looking for a financial investment. Strategic investors generally have a financial reason and a business reason for wanting your company to succeed. They may be, for example, your customers or potential customers.

And before you start any fundraising program, you need to consider how much money you will aim to raise. There’s a fine line between enough and too much. In my experience the right amount of money is always a little bit more than you think you needed.

Making the pitch: know your audience

Before you make your pitch carefully consider:

■  The background of the people to whom you are talking. Do they have expertise in your sector? Or are they generalists looking to make a good investment?

■  How much time have they got.

Then design your presentation accordingly.

When making your pitch, pay attention to your audience members and observe their reactions. Are they taking in your points? Or do they seem to find them boring or uninteresting? To make the best impression you need to be able to judge what goes down best for each audience on the fly — and be prepared to change your presentation style and content as you go along.

I always go into a presentation with a huge range of different PowerPoint slides and presentation styles to call on so I can adjust my presentation to best interest a particular audience.

After effects: the waiting game

It generally takes time for investors to consider your propositions and decide whether to invest. But sitting back and doing nothing while waiting for investment decisions to be made is never a good idea.

After you’ve made your pitch, be open and welcoming to potential investors who come back for more information, and invite them to ask further questions. Make sure your potential investors understand your vision and strategy, as well as your delivery program and expectations.

Also, work to nurture both existing and potential investors. Set up a communications program in order to build up trust and credibility, and to keep everyone informed about the company’s activities.

Think ahead!

And finally, never raise money when you need it — always do it before.

 

Roy Lipski is CEO of Oxford Catalysts Group who helped found Oxford Catalysts Ltd in 2005, led it through an IPO and subsequent acquisition of Oxford Catalysts Group’s sister company, Velocys Inc., and raised more than $130 million from institutional investors. For more information, visit www.velocys.com.

 

 

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