How to create a valuable business in 12 months (and get it funded!)

How to create a valuable business in 12 months (and get it funded!)
18 September 2017

“The journey of entrepreneurship is amazing,” says Matthew “Matt” Bradley of Forward Partners, a company specialised in funding early-stage ventures.

His company has invested into 40 early-stage ventures, and their backing even includes pre-seed ventures (“ideas”) and solo founders.

“We are truly unique and what we offer to entrepreneurs is incredible,” said Matt at a recent dinner in London.

The firm is keen to find additional propositions to invest in. “We like to speak to people with new ideas,” as Matt put it.

The 2nd fund he raised together with his colleagues has £60m ($81m) to invest, and he currently writes pre-seed cheques of £250k ($340k) and up.

The firm is keen to find additional propositions to invest in. “We like to speak to people with new ideas,” as Matt put it.

Here is what I learned by listening to him over dinner.

Money AND operational support

Having run several businesses myself, something that always gets me is the sheer scope of areas that any founder / CEO needs to be knowledgeable about.

It’s a near-impossible feat. We live in a complex, fast-moving world and as founder / CEO you need to maneuver past countless daily challenges and long-term risks.

This is where Forward Partners is trying to get an edge over other funders. Their fund aims to provide their investee companies with “unparalleled operational help.”

A visit to a website they have created as a toolbox for their investee companies will quickly get across what Matt and his colleagues are aiming at:

  1. Help entrepreneurs get funding at a stage when it’s the most difficult to find funding because the risks are enormous.
  2. Give the entrepreneur not just money, but every imaginable form of operational help.
  3. With the combination of those two factors (money & operational support), get companies from pre-seed or seed stage to Series A at the fastest possible speed and with risks being minimised to the degree possible.

As Matt put it:

“We take gigantic risks. …. But we can de-risk companies. One of the things we provide is our accumulated learnings over the past four years. The method we have developed allows entrepreneurs to hit the bullseye more often.”

Does it work?

Forward Partners seems to be doing something right. Applying their principles to their own company, the team behind Forward Partners has managed to build an investment company that has already raised its 2nd fund and is now eyeing its own Series A funding round and geographical expansion beyond the UK and into other sectors.

The theory they set out to prove was that providing a combination of money and operational support is the winning strategy.

“Four years ago, we scraped together a bit of money,” is how Matt describes the origin of Forward Partners.

The theory they set out to prove was that providing a combination of money and operational support is the winning strategy.

Based on the success they have achieved, both investors and entrepreneurs now do believe that Forward Partners can provide “a methodical way at which you can progress and move forward.”

The idea of creating a valuable business within just 12 months was the title of the entire evening talk. Yes, they do want you to succeed that quickly!

Check if these criteria fit for you

The obvious question is, how does Forward Partners decide which entrepreneurs to back?

“Less than 5% of all businesses get funding, ever.”

To make it into the small percentage of businesses that Matt and his colleagues write a cheque to, you need to have a proposition based on three axes:

  • Market
  • Product
  • Team

Regarding the market, it’s vital to appreciate the constraints investors into the fund place on the Forward Partners management team. The fund’s money can only be invested into propositions that have a realistic prospect of yielding at least a ten times return. Achieving such a return requires that your product addresses a significant market. Also, do you truly understand your market when challenged by investors? If you can’t defend the case that you are going to make your investors at least ten times their money, then don’t bother trying to raise seed funding.

Regarding the product, Forward Partners is looking for something where its management team can see a market/product fit. Is the product relevant to a large audience, can it be brought to market easily and effectively, and will it be possible to price it in such a way that the company earns a margin?

Regarding the team and the founder, as Matt admits, “there are lots of schools of thought what you need to be.”

Among his criteria for a suitable founder are:

  • Clever and well-researched
  • Personal integrity
  • Ability to build a giant business
  • Charisma

If the business seeking funding is in a regulated industry (accounting, nursing, etc.), the founder needs to have a suitable professional background.

If it’s not in a regulated industry, no particular background is required. E.g., no one would have had particular qualifications to build a cab-hailing business like Uber, because the very concept didn’t exist before.

Matt advises founders to be “responsibly ridiculously aggressive with your ambition. I’ll then divide your projections by a factor of 2 – 10.”

The investment process

Unlike other early-stage funds where you can only get a meeting if you get a personal introduction (check my recent article on Russell Buckley), Forward Partners is actively inviting entrepreneurs to pitch to them.

E.g., the company hosts regular “Office Hour meetings” where a member of their investment team spends 15 minutes talking to anyone who applies for a time slot.

Matt even goes a step further and provides his private email address on his public LinkedIn profile.

Matt: “If you are growing 30% month-on-month, you will not have much trouble finding money.”

For pre-seed cases, Forward Partners invests £250k ($340k) and up.

For seed stage cases, it’s a spectrum of £500k to £1m ($680k to $1.3m). For this to happen, the firm will expect you to:

  • Be up and running.
  • Have evidence that people like your product.
  • Demonstrate high growth rates.

Matt: “If you are growing 30% month-on-month, you will not have much trouble finding money.”

Ahead of an investment, Forward Partners insists on getting ten references. Out of those, the firm will then pick out three and speak over the phone to the parties that provided these references. This will be followed by legal due diligence and checking the accounts. That’s outside of Forward Partners trying to verify everything you have told them during the past.

This company is one to watch

As someone slightly obsessed with how things work and how organisations are managed, I love the care and attention Forward Partners is investing into its online guides and their blog. They appear to be an incredible partner/investor to have at your side.

Their blog is also following. They just announced a significant broadening of their investment scope.

Forward Partners is a new outfit and one that I had not heard of before attending the dinner. They have big plans, though. According to Matt, they want to “become known as a category-defining VC company asap.” No small feat, given that they are operating in an industry that is crowded with super-clever people who want to outcompete them.

One of the best ways how to arrive at such a goal? “We are an amazing place to work”, according to Matt.

I, for once, certainly appreciated that they are so willing to let their investment partners speak to the public about how to best engage them. If I wanted to create a new business and grow it extremely rapidly, I’d consider myself having a chat with them. In the meantime, I thoroughly enjoy regularly checking out some of the incredible stuff they make available on their website.

A quick note about the source material for this particular article: If you live in London or visit frequently, you might want to check out the service provided by TableCrowd. They host dinners where a speaker is invited to elaborate about their experiences relating to fundraising, building a company, selling a company, etc. I am not affiliated with them, pay for my own dinner participation, and don’t get any commission for recommending them. But they do get my wholehearted recommendation for providing an insightful and quite affordable service to the London start-up scene. I get to meet people that otherwise, I would not have come across (including fellow diners). The source material for my blog is, at least for now, regularly based on those dinner talks.

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