Finding investors is always hard. Here are four tips to help your GovTech Startup find the right investment.
Seek investment from those who share your sense of “missionism”
When you are looking for capital, make sure that you raise money from investors who share your vision and are prepared to back you to deliver that vision. Breaking into a nascent market like GovTech requires patience, trust and support. Starting your journey with the wrong investors could prove detrimental when you look to raise further capital or ride out the inevitable bumps that all start-ups experience.
Pools of capital are increasingly available (e.g. in the form of grants) that you can access and the mindset of traditional investors and wealthy angels is also starting to change.
Make sure you know your customer inside-out
Knowing the public sector is important when it comes to gaining investment as a GovTech startup. If you haven’t worked in government or for a government agency, you should try and ensure that you either find a co-founder, or prioritise hiring someone early, who has worked in the space (e.g., doctor, fireman, local government official etc.). That person must have:
- the domain expertise.
- a foundational understanding of the specific problems your technology can address.
- a plan for how your solution can fit into existing workflows.
- perhaps most critically, a commercial sense of why a civil servant will procure your solution.
If you are unconvincing on any of these points, you should expect to receive a hefty amount of skepticism around your business plan when approaching investment.
Economy, Efficiency, Effectiveness
The National Audit Office uses three criteria to assess the way in which spending is allocated in the civil service – and investors will also be looking for you to explain how your business satisfies these requirements.
Economy: Explain why your solution represents the best value for money. How can it help a department to deliver a required service on budget, on time and alongside other resource constraints?
Efficiency: Can you demonstrate how your solution will offer an acceptable return on the money and resources invested?
Effectiveness: Can you convince a public-sector procurement officer that your solution will deliver what it is intended to deliver?
Convince an investor of these three things and you will have taken a large step towards gaining investment.
Develop your sales pipeline
Few things give investors more comfort than the realisation that you have lined up a clear pipeline of potential, paying customers. Starting to work on your sales pipeline early will often help you iterate and shape your solution for the better. You will also develop more confidence in your business plan which will be apparent in subsequent fundraising meetings that you have. Having customers lined up – both public and private – will always go down well.
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