Startup Playbook | Part 3: Investment Readiness

Getting funded isn’t just about having a big idea or a pretty deck. It’s about being credible. Professional. Investable. And in early-stage startups, credibility is everything. You’re asking someone to back you, not just your product.

You.

And that means getting your house in order before you start knocking on doors...

The truth is, investment rarely happens overnight. A full round, from first pitch to money in the bank, can take six to nine months. And most founders underestimate how much groundwork goes in before they even hit ‘send’ on that first cold email.

You don’t need a Harvard MBA or Silicon Valley pedigree to do this right. You just need to be prepared, professional, and clear on what you’re building and why it matters.

That’s what this guide is for.

1. Get Your Head in the Game

Before you open up a single spreadsheet or start firing off cold emails to investors, pause. Take a breath. Ask yourself this one question:

Why am I raising money in the first place?

Raising capital isn’t a rite of passage. It’s not a badge of honour. It’s a serious, strategic decision, and for many early-stage founders, it can become a costly distraction if you're not ready or clear on what it really means.

Simple put... When you raise equity investment, you’re selling part of your company in exchange for cash. That’s it. You are literally giving away a piece of the thing you’re building, your vision, your equity, your upside, to someone else.

In return, your investor expects… well, a return.

Most angel investors and all VCs operate on the same basic model: they’re looking for companies that can grow fast and either:

• Get acquired, or
• Go public (IPO)

In reality, acquisition is the most common outcome. That means you need to build something scalable, fundable, and eventually sellable. It also means you’re signing up to run at pace. No more dabbling. No lifestyle business vibes. This is about building a company with serious potential and an exit plan.

So before you start lining up pitch calls, get clear:

• Do you actually want to raise equity?
• Are you prepared to bring investors into your cap table?
• Are you okay with being pushed to scale quickly and sell down the line?
• Is this a business you want to run, or one you want to build and exit?

Because if that’s not for you, that’s totally okay. You might want a company that funds your life, gives you freedom, and pays the bills. Nothing wrong with that. In fact, it’s smart.

And if that’s the case, there are other ways to fund your idea. You can build lean, grow with revenue, apply for grants, or crowdfund your way to early traction. (I cover these in Article 2: How to Get Funded Without Losing Your Mind). These can all be better fits depending on your stage, your business model, and your life goals.

Now, if you are raising equity… make it count.

Have a plan. You’re not just raising to “stay alive”, you’re raising to hit something. Product development, key hires, market entry, traction milestones. You raise to unlock growth. Then you prove it. Then you raise again (if needed) on stronger terms. That’s the flywheel.

And yes, there are edge cases, some investors will back you just because they love your mission. That’s more likely in areas like sustainability, social impact, education, or health. These mission-aligned angels do exist. But don’t rely on the exception. Build for the rule.

The goal here isn’t to scare you. It’s to ground you.

Raising money is hard. It’s slow. It’s emotional. It’s full of rejection. So if you’re going to do it, do it with conviction. Know why. Know what you’re giving away. Know what you’re trying to achieve.

Because the first person you need to convince… is you.

2. Get Your House in Order: The Documents That Build Investor Confidence

Let’s step back for a second. Raising investment isn’t just about convincing someone to believe in your big idea. It’s about preparing your company to withstand scrutiny and giving investors every reason to trust you. Because at the end of the day, trust is what you’re selling.

When you raise investment, you’re asking someone to give you their money now, on the belief that you’ll return them a lot more later. This only happens if:

• They believe in you.
• They believe in your plan.
• They believe you’re organised enough to deliver.
• What Is an Investment Round?

An investment round is when you formally raise money from external investors to help fund the growth of your startup. Typically, you raise enough capital to last 18–24 months. Why? Because it usually takes six months to complete a funding round, and if you raise for only 12 months, you’ll be back out fundraising before you’ve even got traction.

Here’s what that funding needs to cover:

• Salaries
• Operating costs
• Marketing
• Capital expenditure
• Product development
• Unexpected overheads
• ...and everything else.

This is why your raise should be sized according to your next big milestone and projections: what do you need to prove or build before your next raise? This is the narrative investors will buy into, and they’ll expect you to be clear on it.

Most early-stage startups follow a funding path like this:

• Pre-seed: Early concept, maybe MVP. First money in.
• Seed: Traction, early growth, clear market insight.
• Series A, B, C etc — Bigger rounds, scaling, institutional funds.

So how do you prepare?

You build your case. You put your company’s most important information into a format that investors can easily access, read, and analyse.

That’s where the data room comes in.

3. Build a Strong Data Room (It’s Just a Folder, But It Matters)

Let’s demystify this. A 'data room' is just a well-organised shareable folder. Google Drive, Dropbox, Notion, OneDrive, it doesn’t matter what platform you use. What matters is structure, clarity, and ease of use.

Think of it as your startup’s CV, the place investors go when they’re seriously considering writing you a cheque. The more convincing and better it looks, the more confident they’ll feel. It needs to be:

• Clean: easy to navigate
• Credible: accurate and up-to-date
• Complete: includes the right documents

Your data room isn’t static. As your company grows, so too will your data room. When you reach later rounds, especially institutional funding or Series A+, your data room will need deeper and deeper financials, compliance documents, employee contracts, and more.

The structure and discipline you build now will make your future rounds faster, smoother, and more professional. Treat your first raise like a rehearsal for the next.

Core Sections of a Strong Data Room:

1. Company Overview

• One-pager
• Pitch deck
• Investment Memorandum

2. Company Structure & Legal Docs

• Company incorporation certificate
• Articles of association
• Shareholder agreements
• Capitalisation table (cap table): shows who owns what and how that changes post-raise
• IP documentation (patents, trademarks, copyright registration)
• SEIS/EIS Advance Assurance confirmation letter

3. Financials

• Profit and loss statement (if applicable)
• 5-year financial projections
• Any existing investor commitments
• Details of any loans or debt facilities

4. Product & Traction

• Product/demo links
• Tech architecture (for SaaS or tech businesses)
• Pilot results or case studies
• Customer testimonials or reviews
• Sales pipeline reports or revenue figures (if applicable)
• Market research (original or third-party data)

5. Team & Advisors

• Founder bios and LinkedIn profiles/backgrounds
• Team structure or org chart
• Advisory board or mentors
• Any key hires planned with a raise

6. Commercial & Contracts

• Any signed contracts, LOIs, or MoUs
• Strategic partnerships
• Terms of service/privacy policy (for online platforms)
• Grant award letters or funding confirmations
• ... Anything else that makes your company more compelling.

Why This All Matters

Many early-stage startups might not have much traction or case studies, etc. That’s okay. You’re not expected to be perfect, but you are expected to be transparent, thoughtful, and prepared.

If you’re missing a document, just be honest about it.

Your Projections will be educated guesses, and that's fine! You just need to show your logic.

If something’s still in progress, give an estimated timeline. It’s better to be clear than to over-promise and get caught out.

You are showing investors how you think, how you work, and how you lead. The more organised, open, and detail-aware you are, the more confident they’ll be.

Investors aren’t just investing in your idea. They’re investing in you. And the data room is one of the clearest reflections of that.

4. Selling the Vision (It’s Not a Pitch Deck — It’s a Sales Process)

Let’s get one thing straight: this isn’t about decks. It’s about selling a compelling vision of the future, and getting investors to believe you’re the one to make it real.

You’re not just pitching information. You’re selling a story. You’re asking someone to take a leap of faith on you. So you’ve got to be sharp. Energetic. Convincing.

Great founders know how to speak investor. That means doing your homework. Read books like Money Train by David Pattison or Angels by Jason Calacanis. Understand how investors think: their incentives, fears, timelines, and expectations. Once you learn to speak their language, everything gets easier.

Your job is to guide them through a journey of trust, starting broad, then getting deeper as they lean in. Think of it as a sales funnel:

1. One-Pager (The Door Opener) A short, sharp PDF with the essentials:

• What do you do
• Why it matters
• Market opportunity
• Traction to date
• What you’re raising and why

This needs to stand alone. Assume they’ll read it without you there to explain. Make it clear, confident, and punchy.

2. Pitch Deck (The Verbal Performance)

This isn’t a report or a presentation. It's a pitch! It’s your on-stage moment. Whether over Zoom or in person, your deck should support you, not distract from you.

Keep it visual. Keep it minimal. You’re telling the story, the slides just reinforce your points Avoid data dumps.

Ditch walls of text. Your slides should:

• Frame the problem with emotion and urgency
• Reveal your solution in one clean sentence
• Show real traction (not vanity metrics)
• Outline the market size clearly
• Showcase your team’s credibility
• Tease your business model and growth plan
• Clearly state the ask and next steps

Think like a storyteller, not a product manager.

There are some great templates out there to help show you what to include > ACCESS HERE

3. Investment Memorandum (The Deep Dive)

This is your long-form business document that will be emailed to investors for them to read in their own time. A written document that walks an investor through your:

• Vision and mission
• The problem and your solution
• Market size and dynamics
• Business model
• Competitive landscape
• Go-to-market strategy
• Traction and roadmap
• Team bios
• Financial projections
• The raise: how much, what for, what they get
• ... Anything else thats relevant or your company.

This is the document investors read on their own. Think: paragraphs, bullet points, charts, case studies. No fluff, just a comprehensive, digestible write-up that builds trust.

4. Data Room (The Final Layer)

Once investors are seriously interested, they’ll want to due diligence 'DD'. That’s when you share access to your data room, the structured folder of key legal, financial, and operational documents (explained in full in the previous section).

So...How to Build These Documents Efficiently

Start with the Investment Memorandum. Write everything out. One section per page. This forces clarity. It’s a test of whether you understand your business.

Then, condense that into a clean, visual pitch deck. Strip away the detail. Focus on flow, emotion, and key insights.

Finally, boil that down again into a one-pager you can send cold.

Each asset has a job:

1. The one-pager sparks interest.
2. The pitch deck sells you and the vision.
3. The IM builds trust.
4. The data room proves credibility.

Together, they move investors from curiosity to conviction.

Don’t cut corners. And remember: this isn’t about tricking anyone, it’s about telling the right story to the right people, in the right format, at the right time.

5. Understand the Angel Investor Psyche

Angel investors are real people. Not dragons. Not sharks. People. They’re not sitting on thrones judging you for sport, they’re usually successful operators, exited founders, or business veterans who want to give back and grow their wealth.

They’re not just investing for financial return, they’re backing missions, people, and energy. They want to feel something. That’s why storytelling matters. That’s why your conviction matters.

Books like Angels by Jason Calacanis and The Money Train by David Pattison are brilliant for getting inside their heads. These aren’t dry finance manuals, they’re inside looks into what makes investors say yes.

At the early stage, angels know there’s a massive risk. Most of their investments won’t return. So when they do back someone, it’s not just because of a flashy deck or clever idea. It’s because of what they feel about the founder and the vision.

They’re looking for:

• ✅ Founders who are credible, coachable, and committed
• ✅ Problems that are big, painful, and worth solving
• ✅ Opportunities that can scale, not just scrape by
• ✅ Markets they understand, care about, or are curious to learn from
• ✅ The right chemistry, they need to like you and believe in you

They want to see that you’ve done your homework. That you know your numbers. That you’re not bullshitting.

So show up with structure, passion and be you!

6. SEIS/EIS: Your Best Friend in the UK

A UK superpower all founders need to know... tax incentives.

SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme) let your investors claim back up to 50–70% of their investment in tax relief, and avoid Capital Gains Tax on any profit they make.

This is massive. It de-risks their decision. Which makes them far more likely to invest.

You apply via HMRC. It’s free. You’ll need a business plan, cap table, and pitch deck. Submit it, wait a few weeks, and get back an Advance Assurance letter. That’s your golden ticket.

Apply here 👉 SEIS Advance Assurance

Investors will ask: “Do you have Advance Assurance?”

You want to be able to say: “Yes. And here’s the letter.”

7. The Funnel: How Investment Conversations Really Work

Think of your raise like a sales funnel. Here’s what it looks like:

• Cold Email or Intro → With a short, sharp message and/or a one-pager
• Initial Call or Coffee → You pitch them. Verbally, visually, energetically
• Follow-up Email with IM → The deeper dive into the opportunity
• Investor Questions & Answers → Via email or follow-ups
• Access to Data Room → For due diligence and document review
• Soft Commitments → Final Agreements → Signed Docs

You’ll stack these commitments. £10K here, £25K there. Bit by bit until the round fills.

Keep track of who’s where in your funnel.

Raising isn’t fun. But if you do the prep, it can be focused, professional, and effective.

8. Valuation: The Art (and Guesswork) of Putting a Price on Your Startup

Let’s talk about one of the most confusing and most important, parts of raising money: valuation for the first time.

What is a valuation? In simple terms, a valuation is the price tag you (or your investors) put on your company. It determines how much of your business you give away in exchange for investment. For example, if you raise £250K at a £1M pre-money valuation, you’re giving away 20% of the business (because £250K is 20% of £1.25M post-money).

Play around with this Startup Equity Calculator> HERE

Higher valuation = less dilution. Lower valuation = more equity given away.

So yes, it’s in your interest, and your duty to your co-founders, team, and future investors, to aim for the highest reasonable valuation you can defend.

But how do you even value an early-stage startup? That’s the hard part. You don’t have profit. Often, you don’t even have revenue. So it’s not about traditional financial modelling. Instead, it’s a mix of:

• 🔍 Traction: The more proof you have (users, revenue, waitlist, retention), the more credible your valuation.
• 🧠 Team: Experienced teams or repeat founders tend to justify higher valuations.
• 🌍 Market size: Bigger market = bigger opportunity = bigger upside.
• 🚀 Vision: Can investors see this becoming a £10M, £100M, £1B+ outcome?
• 📈 Comparables: What are other startups in your space/region raising at?
• 🛡️ Defensibility: Do you have IP, first-mover advantage, or some kind of moat?

It’s also a negotiation. Valuation isn’t a science. It’s an agreement between you and an investor. You’re selling belief in your future. They’re buying into risk. So there’s always give and take.

Tips for founders setting a valuation:

• Look at recent raises on sites like Beauhurst, Crunchbase, or Dealroom to see what’s typical.
• Ask friendly angels or founders what they raised at.
• Avoid going too high too early, you’ll set expectations that might hurt you next round.

But don’t sell yourself short either. Undervaluing now means unnecessary dilution, and can make you look naive or desperate.

Use instruments like SEIS and EIS to your advantage — they reduce investor risk and can justify higher valuations.

... A word on SAFE notes and convertible rounds. If you can’t confidently set a valuation (or don’t want to lock it in yet), you can raise via a SAFE (Simple Agreement for Future Equity) or convertible loan. These defer the valuation to a future round, usually with a cap (maximum valuation) and discount (incentive for early investors).

Your goal is to strike a balance between credibility and ambition. Show you understand your market, your numbers, and your opportunity. Then ask: what is that really worth?

And remember: every % you keep now is worth 10x more if you make it. So fight for it, wisely.

⚡ Summary: Getting Investment-Ready

• Raise for the right reason: not ego. Raise to hit milestones.
• Plan for 18–24 months: cover all costs and give yourself runway.
• Build a clean data room: pitch deck, IM, legals, financials, traction.
• Pitch smart: one-pager → deck → IM → data room.
• Tell a story: sell the problem, not just the product.
• Understand angels: they invest in people, not slides.
• Get SEIS/EIS Advance Assurance: it makes you investable.
• Be smart about valuation: defend it, don’t guess.

Hope this helps. Tom 💚

♻️ Repost to help get those great ideas funded!

🔔 Follow Thomas Constant for strategies, cheat sheets and advice to building a startup in 2025.

🧠 Core Reads

Angels by Jason Calacanis A sharp, no-fluff guide to how angel investors think, what they look for, and how to actually get a yes 👉 https://www.amazon.co.uk/ANGEL-Invest-Technology-Startups-Timeless/dp/0062560700/

The Money Train by David Pattison A UK-focused breakdown of raising capital — full of personal stories and grounded advice from a seasoned founder turned investor 👉 https://www.amazon.co.uk/Money-Train-David-Pattison/dp/1781336451/

The Lean Startup A practical book for anyone building a startup 👉 https://theleanstartup.com/

The SEIS/EIS Guide by SeedLegals Everything you need to know about one of the UK’s biggest early-stage investment advantages 👉 https://www.seedlegals.com/seis-eis/