Six essential factors in securing VC investment

Joanne Mathews is the Founder and CEO of Ten Health & Fitness, London’s original boutique concept which bridges the gap between the medical community and fitness sector.  The idea for Ten Health & Fitness was born in the rehab gym where Joanne was recovering from the back and pelvic injuries she sustained in a car accident. With a background in Marketing – she was previously Head of Marketing & PR for Habitat and Austin Reed – Joanne believes in the importance of brand, and since launch has driven an authentic brand proposition which has seen the business grow year on year. The company now has 8 sites across the capital with the 9th opening mid-August and the 10th due to open later this year.  Ten have just secured a £4million investment from the Foresight Group to support further growth.

We spoke to Joanne about the most important factors in securing private equity investment and some of the strategies that helped secure Ten’s.

Bolster your team

Don’t underestimate the amount of work involved. The process of securing investment is lengthy and time-consuming, and while it’s going on, you will still need to continue with your day job of running your business – and as every business owner knows that’s a full-time job (and more) in itself. It’s important to consider the areas of your business where you are light on manpower and ask yourself if it will affect your ability to prepare for the investment process.  If so, strengthen your team accordingly. Having the right senior management team in place, from HR and finance to operations, will allow you to prepare a thorough business plan but also to respond to your potential investors quickly and professionally throughout the due diligence process.

Secure the right external support

Consider appointing an investment advisory company and look for a team that understands your business, your sector, and your industry.  Once appointed, allow them to do their job.  Be clear on what your ‘red lines’ are; these are the non-negotiable points around the factors that are most important to you – anything from retaining a certain percentage of the shares to board structure or the right to appoint your chairman (rather than having your investor make the decision).  A potential investor will always be looking to minimise their risk, so even if they’re only taking a minority shareholding they will still be looking for ways to take some control of your business.  Remember that you will have you work closely with your investors once the deal is signed so let your advisory team deal with the negotiations and any points of contention on your behalf.

Finesse your founder story

Investors will of course look at figures, but don’t forget that they are also consumers too. Take the time to develop and deliver a really compelling founder story, ensuring your whole business is aligned with your vision and purpose. When we tell Ten’s story, it begins as a “happy accident.” More specifically, the car accident where I suffered back and pelvis injuries and lost my job as a result. Hardly a happy event in itself, but it turned out to be genuinely and positively life changing, as the idea that became Ten Health and Fitness was born in the rehab gym where I was recovering from my injuries. From those painful beginnings, Ten has become the Dynamic Pilates and Physiotherapy destination of choice for discerning Londoners.

That’s my story. Everyone has their own; don’t miss the opportunity to bring it and yourself to life as compellingly as possible. It’s absolutely true that people buy people and if they choose to invest in your company, they are backing you.  It’s the founders and management team that have to deliver the results after all.

Capitalise on your strengths

Identify the real strengths in your business and capitalise on these. Are your strengths in your finances or in your brand? Were you pioneers in your sector? Are you disruptors?  Is your offer unique? Or do you do the same thing as your competitors, just demonstrably better?

At Ten, we have a strong founder story, over 10 years of financial success, and we were of course pioneers of the boutique sector. As we work across two growing but very different markets, healthcare and fitness, we’re able to spread our risk, making us a safer bet for investors.  Pushing your strengths will help you drive maximum value, give investors confidence, and ultimately help you to secure the best deal.

Deliver clarity of proposition

It’s highly likely that your investors will not be experts in the fitness industry so it’s crucial that your proposition makes instant sense to them and they understand its place in the market. If you have a complex proposition and offer many different experiences, work on a simple way of explaining and anchoring what you do.  For instance, at Ten we have one foot in clinical health care and the other in fitness but we’re also in boutique. Some of the investors we spoke to initially struggled to understand our positioning, but when we explained ourselves as ‘the Nuffield Health of the boutique sector’ they got it straight away. Investors see an awful lot of pitches so make sure yours is as clear as possible.

Know what the money is for, and be transparent

Be clear what the investment is for, what you will do with it and what it will deliver. Will it be to buy another business, open more premises, hire more senior people, invest in tech, or for other things? Work with your finance director to build the model and get the finances right before you do anything else. Your investor may not be fully up to speed with your business or your sector but they know figures. So be fully transparent with yours, and be conservative with the projections. Investors will follow due process and you can be sure that anything you try to hide or gloss over will come out in the wash further down the line.

Posted in Most Popular Interviews, The Fitness Network.