As well as speaking to the Hexagon team and working with them to hone their products and pitches, the Sixth Sense cohort also gets to sit in on a number of fireside chats with seasoned professionals from the worlds of entrepreneurship and technology.
One such person is Elaine Warburton OBE. A serial entrepreneur, she is founder and NED of QuantuMDx Group, founder and chair of ReadyGo Diagnostics and chair of Javelo Health. Her two founded companies are both delivering solutions to serious healthcare challenges such as Covid, cancer and TB. She has raised over £100m in funding, experiencing the good, the bad and the ugly of raising capital. Today, Elaine also acts as a program advisor to Sixth Sense.
Here, she shares some of her top tips and experience of securing funding from over the years.
“I did so much pitching – hundreds and hundreds over the last 15 years – because I’m a great believer that although someone may not be ready for you now, they will remember you if you had a good pitch.”
2. Always try and have enough money in the bank
“I have learned that if you have very little funds in your bank account, you’re in an extremely poor negotiating position. So, I try to keep at least six to nine months’ money in the bank, preferably a year.”
3. Prepare to wait for payment
“Revenue never comes in a timely manner. Despite the best will in the world, it takes at least three to nine months sometimes to come in. That needs to be factored into your budget certainly.”
4. Choose your board wisely
“Don’t be friends. Be really good mutual colleagues. Respect each other and also have a different skillset as well. Also remember that a board of very successful people will have egos to manage. I have had a huge amount of friction in some of the boards of my past.”
5. Specialist investors will understand your mission
“I have had a lot of generalists as investors and often, while they were very nice, they simply didn’t understand about healthcare, how long things can take and the ethics involved. Meanwhile I have worked with specialist impact investors that have understood why we haven’t hit certain milestones and really understand the impact of what we are trying to do.”
6. Look for value-add investors
“We were very lucky because we got access to value-add investors. Look for people who can open doors, people who can also follow on with more capital, people who can guide you when needed.”
7. Never, ever sign a personal guarantee
“I once exited a business and thought my personal guarantees were cleared and my resignation as a director dealt with legally. Nine months later I got a knock at the door from liquidators telling me my old company was being wound up and I had to honour in full a personal guarantee over the premises lease. I was apparently the only director registered at Companies House. I had to personally liquidate the business that I had left long before and pay back contracted rental, money I didn’t have. You can write to Companies House and have yourself removed, so regularly check your entry. But I didn’t think I needed to.”
8. Put product market placement above preparing for exit
“Investors looking ahead to exit is a completely normal thing but if you’re in the early days with a technology that might take a long time to come to fruition – venture capital, for example, might not be for you yet.”
9. Build your book in different ways
“We’ve found investors through all sorts of avenues. Sometimes it’s sheer luck and you fall into it. But then other times you need to work hard. It’s almost reactivity and proactivity. If you’re interested in a certain market try and get your name around by doing presentations and conferences. Find out who you need to talk to. To help us build our books we’ve also used corporate financiers or investment bankers who can do a lot of the heavy lifting for you, but they can be expensive. Some of them will work for a success fee but it’s rare.”
10. Keep your investors happy
“Try and hit all of your milestones if you can. Relationship management is such an important part of being a founder or CEO. As the company grows and you give more equity away, your cap table will grow. I have lots of investors and they like to be kept up-to-date in different ways. From an update over prosecco and a pack of crisps, to dinner to boardroom presentations.”
Elaine Warburton OBE will be speaking to our next cohort in another fireside chat in November. Keep your eyes peeled to find out who will be part of that cohort as our selection day approaches 20 September 2023!