Five Reasons Why Businesses Often Fail To Gain Investment or Win Grant Funding

Reason 1: Unviable Market Opportunity

Firstly, many fail because the core market opportunity and customer proposition appears to be unviable. The combination of poor targeting of customers, the lack of a clear definition of the problem being solved for them and poor detail on the proposed product or service solution. The combination of these simply doesn’t look sufficiently attractive or viable to an investor or grant funder. Either that or the size of the market opportunity is too small.

Reason 2: Not Being Investment Ready

Secondly many bids for investment or grants often fail because the business itself doesn’t look investment ready. In some of these cases the market opportunity and business idea may look investable, but the business itself doesn’t. This may for example be a weakness in the management team or the lack of a clear business plan. Sometimes it may be that the proposed product or service the business will sell isn’t yet ready and lacks a coherent plan, timescale and costing to complete its development. Many investors as well as Government Grants like those from Innovate UK target those businesses developing innovative new products, especially those in the technology arena. Accordingly they will invest and support product development pre sales, but only if they believe the business itself will then have the capability to commercially capitalise on that innovation.

Reason 3: Unresolved Risk Factors

Thirdly some businesses fail to win investment because they have too many unresolved high risk factors. Investors and grant funders are not wholly risk averse, but they only want to take calculated risks. So they need to see evidence that all the possible risks have been explored, and resolutions found or risks contained or minimised. The most common of these risks is with businesses that are at the pre-commercialisation stage, often referred to as the pre-seed and seed stages. Here typically the product and the business is still under development with no market traction. Here it is essential that the business can provide the market research evidence of the market potential and the proven strategies for the competitiveness of the business.

Reason 4: Insufficient Scale Up Potential

The fourth reason is that the business proposition simply doesn’t offer a big enough financial return to justify the funds sought. Investors like Business Angels and Venture Capitalists look for a very high multiple of return on their investment typically within 3 to 5 years. Equally most grant fund holders expect to see the businesses they invest in justify the funds given by demonstrating revenue growth and often also the creation of jobs. Many businesses simply don’t appear to be able to generate the scale of sales, profit and employment to give the required levels of return relative to the level of investment or grants they are seeking.

Reason 5: Unprofessional or Inadequate PitchDeck

The fifth reason that so many businesses fail to win investment or funds is because their PitchDeck isn’t well structured and written. Professional investors and now increasingly many of the large fund holders such as Horizon Europe require to see a high quality PitchDeck from any business seeking funds. Investors want to see that the management team bidding for their money are capable of making a strong coherent case for their business. That they are able to present this concisely and effectively. Too many PitchDecks look like they are a rushed together ad-hoc selection of slides which fail to tell a logical and compelling story. Under the close scrutiny of a professional investor or fund holder many PitchDecks simply fail to answer key questions with confidence.

In conclusion, that's the five most common reasons, but of course there can be many others depending on the nature of the business and where it is in its life cycle.

The PurePitchDeck programme aims to cover a good number of these and provide the remedies. It explains in detail why and how to avoid the mistakes most businesses make when seeking investment or applying for grants. It then takes you through a step by step guide on how to create your viable investable high growth business and then how to present that in a professional PitchDeck.