Preparing a Saas product for investment – a Masterclass

Published: 12 October 2021

Our inspiring Leeds Digital Festival Masterclass covered funding and investment guidance for established SaaS and tech businesses aiming to grow and succeed through investment.

IDS Group reaffirmed its dedication to nurturing tech businesses with an information-packed masterclass – offering advice and guidance on preparing an established SaaS product for the next round of investment.

Recognising the many intricacies surrounding the process of raising funds for growth, the session — which was held in conjunction with Leeds Digital Festival and in partnership with Garbutt+Elliott — covered a whole host of questions from how to prepare for investment and make relevant connections, through to selecting the right investor to meet their needs.

Responding to queries from the audience — with the help of compere Dr Simon Jones, former associate dean at Leeds Beckett University, and current dean of business and law at Buckinghamshire University — our carefully curated panel of experts offered knowledge and insight gleaned from many years of experience in their specialist fields.

Among those sharing their expertise was our very own, Peter Hindle-Marsh, non-executive director at agile software development and systems integration specialist, IDS Group; Simon Palmer, partner at accountancy firm, Garbutt+Elliott; Melissa Hendry, founder and managing director of digital transformation agency, ddroidd; plus, Nick Halliday, founder of strategic software solution, eviFile.

For those who were unable able to attend the event, we’ve rounded up a selection of key takeaways which will help put technology entrepreneurs on the right track.

Make the right preparations

Before approaching investors it’s vital that a business’ financials are in the strongest position possible. This doesn’t always mean the company needs to be making huge returns, but that it is hitting forecasts and generating an income.

If awaiting a new contract coming to fruition, it may be wise to delay pushing for additional funding until this is complete. Or, at the very least, wait until there is proof of the deal — perhaps a letter of intent or contract — as these documents will add credibility to your offering.

It is also essential to have a clear idea of what it is that is needed in terms of investment, and how that additional cash will be used. Investors will, quite rightly, want to know precisely what their money is going towards achieving.

Looking beyond the purely financial elements, an investor is likely to want to meet the management team and to get a feel for how well equipped the broader set-up is for growth. Ensuring that those in place reflect the company, its values, and all share the same vision for the future is essential. As the saying goes, ‘people buy people’, and gut instinct is often a large part of securing an investment — make sure that the individuals that you are investing in, are just as dedicated to your business’ future success.

While concentrating on the monetary aspects of your proposition, it may be easy to forget the bigger picture. Your brand will have more of an impact than you may realise — shouting about achievements, and maximising opportunities to put your organisation front and centre is not only a great way to build credibility within the marketplace, but also with investors.

Make the most of the eco-system

Utilise the increasing number of business events taking place in your industry. These no longer need to be time consuming – there are several virtual offerings which can be a convenient way to learn something new and make connections.

Not only can this offer a cost-effective way to gain free advice, it also creates an opportunity to speak to peers who have asked the same questions or faced similar dilemmas but have come out the other side with the answers and experience that you currently seek.

There is also a myriad of resources to utilise. The internet, in particular, will throw up a multitude of results. Spending time finding what’s relevant, signing up to newsletters and following news feeds will help you to stay abreast of what’s happening in the marketplace.

Dedicate time

Many of those seeking investment will be wearing a number of ‘hats’ – managing director, CEO, financial director – the list goes on. Which is why it is important to be realistic about the investment process and the time that needs to be dedicated to it.

Securing funding is a time-consuming exercise. While pursuing investment, a leader could potentially be out of the business for around 3-6 months. Having the right people in place during this period, therefore, is essential.

One way to minimise the impact of this prolonged period of relative absence, is to outsource the tasks that aren’t your specialty. Though this luxury will likely come at a cost, it will allow the necessary time and space to prioritise meeting with advisors, peers, and potential investors — accelerating your product on its journey to growth.

Choosing the right advisor

As with any industry, people have different specialties. What is right for one business, won’t necessarily be the best for another. But that’s not to say that word of mouth isn’t important. In fact, speaking to peers who are just ahead of you in the investment journey will prove invaluable when it comes to generating recommendations.

Hearing others’ experiences is a great way to meet reliable business associates. Ultimately, an advisor will represent your business — so choosing someone that you get along with, trust, and who understands your ambitions, is important.

Accepting an investment

A key factor in finding the right investor, is setting out exactly what it is that you require from a partner at the very start — is it just funds or expertise that you require? Identifying and having a clear idea of where you need help, will help to underpin the decision process.

An investor chosen for their knowledge and expertise is likely to reflect this in the terms sheet, whereas a person solely providing funds will likely be more cost effective. But assessing what will help to move your business forward at a faster pace, may justify a larger equity stake or yield.

Depending upon their own objectives, some investors will want a larger influence on the future of your business. Whereas others will be willing to fund a project with little additional input. Asking the right questions at the outset will make for a smoother transition.

For more information on funding the growth of an established SaaS product, contact the team at IDS Group by calling 0113 859 1669 or email enquiries@ids-group.co.uk.

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