to wait for an answer. They called me back later the same day and asked if I could present to the board of GEIF the next morning in Cambridge. They asked all presenting entrepreneurs to go through this so that they could then coach them in their pitch. When they heard what I had to say they didn’t want me to change anything, not a word. I could not have been happier.
The day of the big pitch arrived. I felt confident and was sure I had all the ingredients together this time. There were eight companies presenting and it was a packed auditorium of mostly business angels, but with some banks, venture capitalists and advisers.
“It’s fresh, it’s frothy, it’s Coffee Nation coffee!”
That was my opening line. I didn’t say it, I shouted it. No one was going to nod off in my presentation. If I at least got everyone’s attention I’d surely increase my chances.
“You’ve seen the success of other coffee companies – Starbucks in the US (value $3bn) and Coffee Republic (floated on AIM this year) – Coffee Nation is set to become the next coffee revolution.”
Investors (usually) look for an emerging trend, wait for signs of success and then invest. This line was a deliberate play to this. They wanted to know what had already happened in the peer group. This would – I hoped – provide reassurance. Then I told them, super confidently, we would be next.
“Nestlé are forecasting exponential growth in premium quality out-of-home food and beverages well into the next decade.”
I wasn’t buying Nestlé coffee any more but it didn’t stop me from quoting their research. After all, they are one of the largest food companies in the world.
“We are creating an entirely new market category, no one else has the experience we do of developing this and it is giving us a distinct competitive advantage.”
Talking about customers, I said:
“We got a quote from a customer in Manchester. ‘Best coffee in Manchester – we don’t go anywhere else! It’s nice not to have to queue.’ ”
We were indeed now getting great customer feedback with some regularity. My aim was to reassure the audience that it worked for the consumer and not having to queue underpinned a benefit of this new category.
I helped them with that a little:
“This customer called us on our freephone number to give us this feedback. When was the last time you went in to a convenience store and had such a great experience that you went home to call the company and tell them?”
This was an ace. I could almost hear people thinking “Wow, all for a 99p cup of coffee.”
“We have four concessions that have been trading for a combined 40 months so we don’t need your money to test, research or prove the concept – we seek straight roll-out funding. We’ve already done the hard bit and we now seek investors who share our vision and want to join us on the journey.”
The aim here was to reassure them that there weren’t going to be endless rounds of further fundraising where these investors would get diluted.
Finally, I also projected my vision forwards and invited the audience to consider what success might look like. I explained that I was going to read out a section of a hypothetical newspaper article written about Coffee Nation. The date is July 2000:
“Little Coffee Nation stations are popping up everywhere giving the urban customer what they want when they want it. No hassle, no queues and no need to speak to anyone. Suddenly it’s hip to help yourself!”
Of course it was actually November 1998 and this article had yet to be written but it was believable. It brought everything I had talked about to a point, a singularity that they could all get their heads around.
I finished comfortably within the 12 minutes allocated. You know when you’ve nailed it. I knew it before I even finished. The applause was very different to that for the previous companies’ presentations. It wasn’t out of obligation to be polite – it was because what they’d just heard had impressed them. It had been a very long time in the coming but on that day it finally came together for me. I had learnt when and how to raise money for a young business, just in time.
As I sat down and the founder of the eighth and final company took to the stage his opening remark was, “How can I follow that?” Even the founder of another company was still selling my proposition for me.
After the presentations, investors could meet with presenting companies face to face. I was mobbed. I took names, addresses and answered questions. I wasted no time in asking directly if they wanted to invest and how much. I was offering 20% for £100k. I had to maintain the momentum.
The day was a complete success. My bank had also now set out an offer in principle of a £90k Small Firms Loan that was 75% underwritten by the government. This would be available if I was able to match that debt with an equal equity investment.
I followed up with the prospects and had £75k committed by the end of the week. Once some angels heard others had committed they were prepared to invest themselves. The balance was shored up and I soon reached the magic £100k required before the Small Firms Loan could be triggered.
A killer threat from left field
Despite having made such a leap forward I still faced some short-term serious issues. I had to manage the day job as well as bring these investors on board.
A call came in from a creative agency that I had used to design our cups and the menu panels on the concession unit. I owed them £8k and had been upfront with them that I couldn’t pay it until I had secured further investment in the business. They said if they weren’t paid within 48 hours, in full, they would issue a winding up order against the business. This could be a disaster. A notice would be posted in the London Gazette and my bank account would most likely be frozen. I attempted to speak with their MD but he wasn’t having any of it.
I couldn’t believe this was happening. I felt I had been so careful in managing my creditors through this difficult period. I was a whisker away from nearly £200k in funds but I was still facing the end of the road if I didn’t sort this and fast. I literally sat down and wrote a list of all the friends and family I could ask to help me. Martin (who had just invested in the business) and my good friends Anthony and Heath came to the rescue. This was a reminder to never take your eye off the ball. Killer threats may come at an unexpected time and from unexpected places.
Learning points
Don’t try to build a business before you really know it works – hoping it all goes according to plan before your money runs out is not smart.
Prove the concept on a small scale. If you then need to raise funds to grow the business later on you will be seen as far lower risk and hence give away less of your equity.
Spend time listening to people who buy your product and those that don’t, especially those that don’t. Focus on understanding your customers and how to unlock explosive sales growth. Little else matters at this stage.
You can spend days chasing private investors, modelling and remodelling different scenarios. Answer their questions but there then comes a point where you have to ask “Are you going to invest?” Don’t let yourself be pulled around.
Don’t try to build a business by putting costs first. Sales growth ignites new business success. You want people flocking to you and talking about your offer. Sales always have to come first. Profitability is then unlikely to be an issue.
With the product right, be confident about your pricing. Demand continued to grow as my prices increased.
Don’t be afraid to ask for help from suppliers. Most will want to help. If you can’t afford to pay going rates or can’t pay at all then strike a deal. Get them excited about the prospects for your business and the opportunity this