5 key questions tech start-ups should ask when looking for seed funding
By Ann Casey, Investment Executive
If you’re an aspiring tech start-up looking to take your first
steps towards commercialisation in 2016, the chances are you’ll
need seed funding.
Seed funding provides the initial capital used
to start your business. As a tech start-up this is usually through
equity and can support your research and development plus any
operating costs until your product or service can start generating
It’s a high risk investment, but when
successful the rewards can be huge.
Finding investors for seed funding can be
challenging: you have no customers, no revenue and no tangible
assets. You’re also likely to be entering a new market, with
a new product/service and a new management team, so how do you
Here are a few key questions aspiring tech
entrepreneurs may wish to consider to ensure they have the best
chances of sourcing seed funding:
my business idea disruptive?
Investors hoping to achieve large returns are
often keen to invest in disruptive business ideas that change the
way people do something rather than an improved version of an
existing product or service. New technology that can make
people’s lives easier or save them money will always excite
I find any early supporters?
Seeking out an Angel co-investor, mentor or
advisor with relevant experience and a little bit of cash, even if
it is a friend, can add valuable credibility to your proposition
whilst de-risking it and making it stand out.
I have the right market?
Understanding and targeting the right market
is critical. You may think you’ve come up with a great idea,
but if the market is already moving on, your business is unlikely
to succeed. Equally, if you’re targeting a new market you’ll need
to demonstrate its growth potential.
I sell my team?
Investors won’t just be buying into your
business idea, they’ll also be buying into the people and
management team behind it. Investors will want to see passion,
determination and a mix of experience in the management team that
will deliver the promised return on their investment. Identifying
any skills gaps in your team and being open-minded about
recruitment will also help your cause.
I have the right valuation?
While you may be passionate about your idea
and confident about its potential, no investor will be interested
in anything less than a sensible and justified valuation of what
Looking forward in 2016
Despite the risk involved for an investor there remains a big
appetite for investment in the tech sector with research showing
venture capitalist investment in UK tech start-ups was up by 70% in
2015 when compared to the previous year.
Therefore the opportunities for young tech
start-ups have never been stronger and 2016 could be the most
successful year yet for aspiring tech entrepreneurs to find the
seed funding they need to start building a successful business.
Finance Wales’ technology ventures team manages the Wales
Technology Seed Fund and can provide equity Investment from £50,000
to £150,000 for start-up and early stage Technology business needs
in Wales. To find out more click