Insights on Early-Stage Investment What founders need to know

Raising capital for the first time is a daunting step for any founder, with countless pitfalls that can derail even the most promising idea. Drawing on years of experience guiding entrepreneurs through investment rounds, Matthew Hayes, Managing Director at business consultants Champions (UK) plc, shares his insights on what investors are really looking for and how founders can position themselves for success.

What are the top three things founders should focus on when preparing to raise their first round of funding?
The first and most important piece of advice is simple: be prepared. Founders must come to the table with a fully considered proposition that is accurately costed and benchmarked against the competitive landscape. Investors want to see that the basics have been thoroughly thought through. Alongside preparation, the real emphasis should be placed on differentiation. A founder needs to be crystal clear about their USP, for example what they're bringing to the market that doesn't already exist, and why there is a need for it. The point of difference is often what tips the scales in your favour. Finally, particularly at the start-up stage, investors are investing in you. The founder's background and vision carry enormous weight, especially in SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme) contexts. Investors want to know if they can trust you and if they believe in your vision, as well as deciding if you're the kind of person they want to work alongside. In many cases, selling yourself is just as important as selling the business.

When evaluating early-stage start-ups, what key factors do you prioritise?
The first filter is always credibility. That applies across three areas: the proposition itself, the point of differentiation, and the business model. Has the idea been properly researched and well presented? Is the USP a genuine and proven advantage? Is the business model one that has been tested, even at a small scale? Having had successful transaction, proving there is a market demand for the product or service, makes a huge difference compared to a purely theoretical model. Moving something from theory into practice, however low-key, shows that the idea works in reality.

Another priority is how the business positions itself within the wider market. Some founders are wary of acknowledging competitors, but in reality, the presence of similar businesses can be a positive sign. It demonstrates everything from market demand and cultural shifts to emerging trends. Being "first" isn't necessarily best, MySpace came before Facebook. What matters is proving why your proposition is stronger and more sustainable than the rest.

How should founders handle a "no" from an investor? What's the best way to build long-term relationships, even if they don't secure investment straight away?
A "no" should never be viewed as final. The first engagement with an investment house is just that: the first of many opportunities, not a one-and-done shot. Building sustainable businesses takes years, and along the way, maintaining regular communication with investors is vital. Showing how you've progressed since the initial pitch, especially if they passed on you too early, can open doors later. When you do hear "no," treat it as a learning opportunity. Ask why. What held them back? Was it the proposition itself, or the way it was pitched? By understanding the objections, you can either fix them for the future or sharpen your approach with other investors. History shows that rejection isn't a death sentence for a good idea. KFC's Colonel Sanders, for example, pitched hundreds of times before someone finally said yes. The lesson is clear: persistence, but also learning and relationship-building, are often just as important as the initial pitch.

What start-up sector or trend excites you the most at the moment, and why?
Biotech and MedTech are incredibly exciting. There's a groundswell of innovation happening, with early-stage businesses already making billion-dollar impacts, such as recent breakthroughs in blood testing technologies. This sector combines deep human need with transformative technologies and feels set to keep gaining momentum.

Another area of strong interest is social care and social good. When businesses can combine sustainable profitability with measurable social impact, they create long-term value that goes beyond financial return. This intersection of purpose and performance has huge cultural relevance and investment potential. Personally, one area that feels less exciting right now is AI. With four out of five new opportunities describing themselves as "AI-enabled" or "AI-led," the space feels overcrowded and, in some ways, already commoditised. If AI is the point of difference, it isn't really a point of difference anymore. Instead, it should be seen as an enabler of a strong business plan, not the business plan itself.

Which start-ups that you funded this year excite you the most and why?
Two particularly exciting investments for us this year have been Red Umbrella and Care Coins. Red Umbrella focuses on providing mental health training and structure for organisations such as Jaguar Land Rover and BAE Systems. It meets a growing demand for integrated mental-health provision in large workplaces, addressing both cultural and organisational needs. Care Coins, its sister business, takes a more individual-focused approach. It provides accessible, self-managed therapy options that can be supported by employers or accessed directly, removing many of the barriers to care. Both of these ventures demonstrate how commercial sustainability can be blended with real social good, creating impact that's both cultural and economic.

These businesses are particularly exciting because they sit at the heart of a wider cultural shift. They recognise that mental health and wellbeing are not optional extras but core parts of modern work and life.