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As Britain's small businesses mark ScaleUp Week, many founders will be wondering: Is all investment, good investment? And how do you recover when an investor refuses to help bankroll your idea? Here four founders, who work with the legal firm Harper James Solicitors, share their stories.

As lockdown restrictions lift, small businesses across the country are finally beginning to look to the future. Having survived, many will be looking to secure new funding to help them thrive.

Recent figures indicate the signs for UK start-ups are positive. According to new data the amount of capital venture investment which firms specialising in tech are set to receive will hit record levels this year.

Data business PitchBook found tech firms in the UK and Ireland raised £5.3bn in the first three months of 2021, placing the sector on track to surpass last year's funding record of £13.4bn.

 

“We turned down the TV Dragons.”

The Founders of a revolutionary new healthcare app who appeared on Dragon’s Den say they walked away from an offer of investment because it wasn’t right for their business.

But Gina Dorodvand and Hawaa Budraa, the Co-founders of Onaria Technologies, insist appearing on the show will nevertheless inspire them to future success.

And the entrepreneurs, who Harper James Solicitors are supporting through the exciting early stage of their business journey, say their main takeaway from being on the BBC show is to “never give up.”

Reflecting on their experience on the programme, Gina said: “We’ve absolutely no regrets about going on because the whole process has just made us even more determined to succeed.

“Going into the Den is very nerve-wracking. But Hawaa and I have been used to answering difficult questions from day one.

“When you are setting off as a business you have to get used to that and you have to get used to people saying ‘no’ from time to time."

Gina and Hawaa’s appearance in the Den, which was screened last month, saw them bid to secure investment for an app called uunn.

They created the device, which helps you keep your teeth clean and plaque free, while students at London’s City University six years ago.

Since then the entrepreneurs have raised six-figure sums from investors left wowed by the product, which uses artificial intelligence (AI) to detect plaque on your teeth, so you know exactly which teeth need your special attention when brushing.

Gina and Hawaa wanted to secure £70,000 from multi-millionaire investors Peter Jones, Deborah Meaden, Peter Jones, Touker Suleyman, Tej Lalvani and Sara Davies.

After a highly impressive pitch, Gina and Hawaa were offered all the cash by tycoon Touker in return for a 30% stake in uunn.

But Gina and Hawaa refused to budge from 3.5% and they walked away because they were understandably unwilling to relinquish so much of a company they have worked tirelessly to build up.

Gina said: ‘We were made an offer by Touker, but it just wasn’t right and it is important to have the confidence to be able to say ‘no’ and walk away.

“The last six years have not been easy. Developing a product and getting it off the ground takes time, passion and resilience but Hawaa and I have plenty of that!

“My advice to other people starting out is know your product inside out and to not let a knock-back put you off.”

 

Founders should never be scared to say no

Francesca O’Brien, the Head of Investment at Syndicate Room, a UK venture capital fund, said: “Founders should never be afraid to say no if they think a deal isn’t right for them or for their business.

“Equally a founder who is knocked back should not let it put them off trying again. If they believe in their business and an investor can see promise and potential in it then the investment will eventually come."

Francesca said there are a number of things business seeking to secure investment can do to boost their chances.

"One of the key things is to ensure you conduct market research on the viable investment proposal,” she advised.

She continued: "Investors also want to see potential and to see that a business has the capability to scale. I’ve also noted that investors can sometimes be put off by investing in enterprises run by a single person. So founders who are set up in this way may want to take that into account as they go through the process of trying to secure investment.

"Despite the challenges of the 18 months which the pandemic has thrown up, a huge amount of investment has still been taking place and opportunities still exist.

"Businesses specialising in eco and green products have been of particular interest to investors and we have seen a large amount of deals in this area.

"For any founder one of the golden rules is to think strategically and make decisions appropriate to them and to their business. Getting investment can be important, but getting investment at the right moment is even more important."

 

Founders should not ignore the classical route of trading your way to success

Rahul Chakkara, CEO of Manas AI, an AI-powered customer retention, insight and trends company, said: "While getting seed funding is a good way to evaluate your own proposition and get validation, founders should not ignore the classical route of building a product or service and trading your way to success. This route gives you more freedom and often time to focus on the business instead of preparing pitch decks. And it maintains the option to retain equity or go for funding at a higher equity.

“Funding and valuation is seen as the currency of success. While true in later stages, it can be misleading in early stages.”

 

We are relishing the opportunity of new funding

Kay McGuinness, the Chief Operating Officer of engineering firm ANB Sensors, said: "We are currently in the process of securing a further funding round.

"We have been lucky in this round as we have an excellent board behind us who have, through using their networks, alleviated a lot of the stresses of going to numerous pitch events and drumming up the interest of investors.

"This process has been smooth compared to our previous investment round, which took 18 months. In that process we went to various pitch events and received offers from different investment groups building up relationships with the people involved, but ultimately having to take tough decisions in ensuring we got the right set of investors for us. This was a long process and at times it felt like knock-backs and high stress but ultimately the end justified the means.

"We now have an excellent rounded investor group who provide us with the knowledge we were lacking previously and feel like a real team. This next round will mean a change in structure again. But we are relishing the opportunity to work with our new investors as we take on the next challenge of building a profitable and sustainable business."

Contributed by Nick Owens
Neina Sheldon
Article by Neina Sheldon
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