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Although the costs of launching a startup have fallen substantially, surveys[1] have shown that access to finance remains the top issue for founders.

Entrepreneurs recognise the need for funding but very often don’t know where to look or the best avenues to take to try to secure it.

James Richardson of Metric Accountants shares some tips on how a startup can maximise their chances of successfully raising the cash they need.

  1. Be aware of SEIS and EIS

The SEIS scheme has helped over 1,600 startups raise funding, most of them in the technology sector.

In fact, 86% of angel investors say that they always invest via the SEIS and EIS tax incentive schemes, with over half stating that they would not have invested at all without these schemes being in place.

Clearly, if these schemes are important to potential investors, they should be important to founders seeking investment.

Founders don’t need to know the detailed mechanics of the scheme – after all, that’s what the tax adviser is for – but they should at least be aware of the scheme and, ideally, seek pre-approval from HMRC so that they can reassure the potential investor that any investment made will qualify for SEIS or EIS.

  1. Consider Business Accelerators

Most startups are well aware that there are plenty of Incubators and Accelerators that can provide support, expertise and seed funding to help a startup get off the ground.

However, founders are generally less aware that Accelerators can help them to grab the attention of would-be investors.

By carefully choosing and applying to join the right Accelerator for your business, you’ll gain access to people with the right experience and contacts for your industry as well as make you more visible to investors interested in your sector.

In recent years, there has been a growth in the number of Accelerators that are specialising in a particular industry, such as Level39 (fintech), HealthBox (medtech) or The Bakery (adtech), so choose wisely.

  1. Talk in the same language as “The Money”

There are lots of things that can prevent a startup from being a success. Failing to understand financial jargon shouldn’t be one of them.

Startups need to remember that investors’ interests and perception of risk are likely to be different (to varying degrees) to those of entrepreneurs. It’s during the fundraising negotiations, which try to try to deal with these differences, that a relationship can often fall apart before its even started.

The easiest way for a negotiation to stall is if the founder cannot speak the investor’s language and answer the questions that matter most to them. A broad understanding of phrases such as “Pre-money vs. Post-money Valuation”, “Convertible Debt “, “Shareholders’ Agreement” and “Pro-rata Rights” will help you avoid needlessly giving up equity, control and profits (or wrongly turning down a perfectly sound offer).

  1. Keep your investors happy and updated

It’s very rare that a startup will only need one round of funding. Chances are 12-24 months after your initial raise (if not sooner) you’ll be seeking further investment.

If you have done a great job of keeping your seed investors well-informed, providing regular progress updates and seeking their advice, the chances are they will be open to investing further cash in a subsequent round.

You want to avoid having to search for new investors if at all possible. After all, every day dedicated to raising cash is a day that was not spent growing the business.

[1] Surveys undertaken by The Coalition for a Digital Economy (Coadec) Sept 2014 and TechCityInsider May 2013