Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
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Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
  • These new shares could have additional rights that your shares don't have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.
growth capital ventures
Insights
Jenna Taylor
· 3 min read
· Updated on

Raising money for your startup Step 1: Create a great elevator pitch.

Pitching for investment can happen in many ways... 

...for example, you can pitch face-to-face in a live setting, online, via an equity crowdfunding platform, or on paper with your investor presentation and executive summary. With an online co-investment platform, like GrowthFunders, you could be given the opportunity to do all three as part of your fundraising campaign.

In each of these three situations, the way you introduce yourself can be one of the most important parts of your pitch, as it’s the first opportunity you get to make your business stand out. If you can explain what your business does in a clear, creative, and concise way, without using jargon, and in less than 30 seconds, then you’re off to a strong start.

The best way to do this is with an elevator pitch. We'll look at some tips for delivering great elevator pitches as well as some fantastic examples in a bit. The great thing about an elevator pitch is that it can be reversioned depending on the type of pitch you're delivering.

For example, the face-to-face pitch: the sub-30 second approach mentioned above, written: a single sentence to a paragraph, online: your pitch video is the perfect way to introduce potential investors to your business and show them what it's all about.

This post will focus on elevator pitches for face-to-face and live pitching opportunities. Depending on the set-up, the potential investors in your audience may have a number of pitches to view on the same day and will watch one after the other.

Although they will most likely be taking notes and will have your supporting documentation (usually in the form of your executive summary), it’s better if they can remember your business in one simple sentence.

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Time restraints

Each pitching opportunity comes with its own guidelines, which you should be aware of, prior to delivering your investment pitch. One of the most important things you will need to know before you pitch is how long you have.

This can be as different as 5 minutes or 30 minutes, but as long as you have your core presentation ready, you can edit or enhance, depending on the time restraints given.

The wrong way to introduce your business

It’s not the time or place to tell your life story; right now, they don’t need to know about the paper round you had at the age of 11. At this point, if it’s not relevant to your business, leave it out. It takes up too much of the (limited) time you have to pitch.

The right way to introduce your business

A well-written elevator pitch is the key to the delivery of a successful investment pitch. If you don’t know how to write one, worry not – below, you’ll find some top tips to writing the perfect elevator pitch.

 

1. Twelve Tips for a Winning Elevator Pitch

Nicole Fallon, Business News Daily Assistant Editor

This article gives some great tips for writing and delivering a great elevator pitch from a number of entrepreneurs and business professionals:

“Start off strong. "Eighty percent of your success will depend on your opening line. It must snag your listener's interest and make them want to know more. Do this right, and your prospects will follow you, wanting more." – Bert Martinez, founder and president of Bert Martinez Communications [8 Essential Questions Your Elevator Pitch Should Answer].”

2. Mad Libs For Pitches: How To Perfect The One Sentence Pitch

Evelyn Rusli

“When it comes to the one sentence pitch, [Founder Institute founder, Adeo] Ressi says “Most entrepreneurs manage to screw it up… How much better would the world be if every startup could explain their business well in one sentence?”

To help entrepreneurs perfect the art of the micro pitch, he’s created a rudimentary template in Mad Libs style:

My company, ___, is developing ___ (a defined offering) to help ___ (a defined audience) solve a problem with ___ (?)"

3. Elevator Pitch Essentials

Chris O'Leary

Chris' essay tells you everything you need to know about elevator pitches, from a high-level explanation and down to some nitty-gritty details. Here are his "Nine C's of an effective elevator pitch":

  • Concise
  • Clear
  • Compelling
  • Credible
  • Conceptual
  • Concrete
  • Customized
  • Consistent
  • Conversational

4. Create the perfect elevator pitch to an Angel Investor

Venture Giant

This article encourages you to ask yourself some questions as you write your elevator pitch, including "Is the elevator pitch designed with a specific outcome in mind?" and "What is your desired outcome". The idea is that these questions will help you to focus your introductory pitch and make sure it does its job correctly.

5. Give the perfect elevator pitch

Kevin Daum, Inc. 500 entrepreneur

 

This post suggests three steps to elevator pitch success: Connecting with Empathy, Offering an Objective Solution, and Providing Differentiation as “you have about 1--2 minutes to leave an impression powerful enough to get someone to continue the conversation after exiting”. The aim is to tease your audience and leave them wanting more.

6. Eight mistakes entrepreneurs when pitching to investors

Martin Zwilling

Whilst this article talks about a whole presentation, #1 - "The elevator pitch is longer than one minute" is good as it explains why this part of the introduction benefits from being brief: "If your 'elevator pitch' is longer than one minute, you will have a very difficult time raising money because you will not have enough time to make a compelling investment case."

Bonus: Listen to startups give elevator pitches to a top VC – in elevators.

Martin Bryant

This fantastic post gives you the opportunity to listen to some actual examples of elevator pitches as delivered to Albert Wenger of New York VC firm Union Square Ventures.

We'd love to know which elevator pitches from the Bonus article stood out most to you and why. Let us know your thoughts by leaving a comment below.

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