# Why fundraising no longer means kissing a lot of frogs Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-07-26 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Smart Money: The Key to Securing Funding for UK Meta Description: Discover how UK-based entrepreneurs can navigate the challenging funding landscape, find collaborative investors, and break down entrenched barriers to secure smart money. URL: https://financedigest.com/why-fundraising-no-longer-means-kissing-a-lot-of-frogshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-471605423-1736815534986-compressed.jpg) _By_ **_Simon Glass,_** _CEO, [Qodeo](http://www.qodeo.co.uk/)_ Entrepreneurs hoping to secure funding from US venture capitalists are beginning to find that interest is thin on the ground and it’s not just a question of VCs cherry-picking the most select opportunities. After grappling with what Bloomberg [describes](https://www.bloomberg.com/news/articles/2022-07-13/venture-capitalists-face-a-reckoning-as-funding-and-deals-slow) as the ‘worst quarter in almost a decade’, investors are putting the brakes on global funding across the board. Despite the economic uncertainties that have ruffled the feathers of US VCs and private equity firms, the slowdown does not spell disaster for UK-based entrepreneurs. For too long the biggest funds have [dominated the market](https://www.financedigest.com/facebook-faces-3-2-billion-uk-class-action-over-market-dominance.html "Facebook faces .2 billion UK class action over market dominance"), focusing on their own areas of interest, bidding up prices and skewing valuations to the detriment of the entrepreneurial community. As those with deep pockets keep their distance, their preferred model of [investing overseas](https://www.financedigest.com/brexit-no-obstacle-as-chinese-overseas-property-investment-doubles.html "Brexit no obstacle as Chinese overseas property investment doubles") – taking the business back to the US and leading it to an IPO – is likely to change. Downward pressure on valuations will open the market to smaller investors with a more diverse portfolio and in turn, this will give [entrepreneurs from every](https://www.financedigest.com/10-secrets-every-entrepreneur-needs-to-thrive-in-2023.html "10 Secrets Every Entrepreneur Needs to Thrive in 2023") background, sector, and region a chance to sit at the table. Make no mistake however, anyone who has entered the [funding race before will know that there are multiple hurdles along the way](https://www.financedigest.com/6-ways-to-fund-university.html "6 Ways to Fund University") and jumping over them is highly challenging, especially while running a growing business. **Smart money** Finding the right investor is the first place to start. What this means is a funding [partner that is collaborative and delivers](https://www.financedigest.com/gumgum-and-frameplay-partner-to-deliver-contextually-relevant-intrinsic-in-game-advertisements.html "GumGum and Frameplay Partner to Deliver Contextually Relevant, Intrinsic In-Game Advertisements") more than just money. Alfred Lin, a venture capitalist and partner in VC [firm Sequoia calls](https://www.financedigest.com/international-law-firm-calls-in-viato-connect-uk-and-us-offices.html "INTERNATIONAL LAW FIRM CALLS IN VIATO CONNECT UK AND US OFFICES") this ‘capital as fuel’.  It is smart money, and it could provide contacts that are invaluable for [growing a sales](https://www.financedigest.com/duct-tapes-market-to-grow-at-5-2-natural-rubber-based-adhesives-to-contribute-over-4-5th-of-total-sales-fmi.html "Duct Tapes Market to Grow at 5.2%; Natural Rubber-Based Adhesives to Contribute Over 4/5th of Total Sales: FMI") network; it might come with skillsets that propel the company forward technologically; or it could be leadership ability which allows a strategy for the future to be laid out. Smart [money comes](https://www.financedigest.com/money-20-20-europe-how-far-have-we-come.html "Money 20/20 Europe – how far have we come?") from investors who are interested. They want to understand the [business and help it grow](https://www.financedigest.com/exit-bee-hires-neil-stewart-as-business-development-director-as-its-client-roster-grows.html "Exit Bee hires Neil Stewart as Business Development Director as its client roster grows") and ideally, they will challenge established views and offer new perspectives. But they are not interested in controlling the day-to-day running of the company; their role is to help the [CEO run it more successfully and with greater returns](https://www.financedigest.com/factbox-five-facts-about-returning-ubs-ceo-sergio-ermotti.html "Factbox-Five facts about returning UBS CEO Sergio Ermotti"). **Entrenched barriers** In theory, [raising finance through investment](https://www.financedigest.com/5-tips-for-raising-investment-as-a-start-up.html "5 tips for raising investment as a start-up") should be straightforward, but in practice it is often not. [Historically VCs have fished in small](https://www.financedigest.com/queens-final-resting-place-is-a-small-chapel-in-historic-windsor-castle.html "Queen’s final resting place is a small chapel in historic Windsor Castle") pools that are limited by their known network, geography and diversity bias. Gender is a well-known issue, and many [female entrepreneurs](https://www.financedigest.com/when-did-discernment-become-a-dirty-word-for-female-entrepreneurs.html "When Did Discernment Become a Dirty Word for Female Entrepreneurs?") say that they are overlooked repeatedly, however, regional bias has meant that sources of VC capital, in the UK for example, are harder to get the further away from London you are located. Stephen Fusi, an innovation expert, formerly at US Duke University, and member of Qodeo’s advisory board at funding matchmaker, Qodeo [says](https://qodeo.com/clearing-the-bias-hurdle-for-african-american-entrepreneurs/): “Many entrepreneurs can rely on old university networks, personal and professional connections, and word of mouth. But what happens when the entrepreneur isn’t part of traditional business-school alumni, or they’re located in smaller regional areas? What if they have a fire in their belly but weren’t born with connections and a silver spoon in their mouth?” He points to studies that have shown that a lack of ethnic diversity in [investment firms limits their ability to look at investment opportunities](https://www.financedigest.com/global-lycopene-market-outlook-business-challenges-investment-opportunities-progression-status-revenue-expectation-and-forecast-2022-2029.html "Global Lycopene Market Outlook Business Challenges, Investment Opportunities, Progression Status, Revenue Expectation and Forecast 2022-2029") from different perspectives. Paul Gompers (colleague of Qodeo Advisory Board member Professor Josh Lerner) [writing](https://hbr.org/2018/07/the-other-diversity-dividend) in Harvard Business Review outlined his examination of the decisions of thousands of venture capitalists and tens of thousands of investments: “The evidence is clear: Diversity significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns. And even though the desire to associate with similar people—a tendency academics call homophily—can bring social benefits to those who exhibit it, including a sense of shared culture and belonging, it can also lead investors and [firms to leave](https://www.financedigest.com/russias-offer-to-foreign-firms-stay-leave-or-hand-over-the-keys.html "Russia’s offer to foreign firms: stay, leave or hand over the keys") a lot of money on the table.” **Cutting out the VC noise** Now, when the market is shifting, entrepreneurs and VCs with a more open-minded approach have a [unique opportunity](https://www.financedigest.com/manufactured-homes-unique-opportunity-to-aid-the-housing-crisis.html "Manufactured Homes’ Unique Opportunity to Aid the Housing Crisis  ") to find each other and bring about change. Enabling that search for a [match is technology](https://www.financedigest.com/all-shapes-and-sizes-how-to-match-your-technology-to-your-finances.html "All shapes and sizes: How to match your technology to your finances") – namely dating platforms for funding. Qodeo, for example, has a database of more than 6,500 VC and [private equity](https://www.financedigest.com/procurementin-european-private-equity-investment-adding-value-to-the-boardroom.html "Procurement in European private equity investment – adding value to the boardroom.") firms, not just in the UK, but across the world, that have been pre-vetted. This means that time-poor [CEOs and finance directors no longer must spend](https://www.financedigest.com/chipmaker-infineon-ready-to-spend-billions-on-acquisitions-ceo.html "Chipmaker Infineon ready to spend billions on acquisitions – CEO") the 350 hours on average that it takes entrepreneurs to find a suitable investor. A proprietary algorithm [sets the business](https://www.financedigest.com/acca-sets-out-magnificent-seven-attributes-vital-to-success-in-modern-business.html "ACCA Sets Out ‘Magnificent Seven’ Attributes Vital to Success in Modern Business") up with investors that are the best match for them. This allows emerging companies, particularly those located in the regions, to have a better opportunity to find a [potential investor](https://www.financedigest.com/virgin-orbit-says-space-startup-in-talks-with-potential-investors.html "Virgin Orbit says space startup in talks with potential investors") who ‘speaks their language’. For a small subscription, a service like Qodeo gives entrepreneurs guidance on their profile and valuation, access to research and connects them with the smart money by identifying specialism matches or skills [gaps that can be filled](https://www.financedigest.com/analysis-energy-hungry-europe-cant-look-to-u-s-shale-to-fill-any-opec-gap.html "Analysis-Energy hungry Europe can’t look to U.S. shale to fill any OPEC gap"), preparing the groundwork for a relationship that will be mutually beneficial. The aim of a [service like Qodeo is not to educate entrepreneurs in raising finance](https://www.financedigest.com/facilitating-open-finance-through-secure-services.html "Facilitating open finance through secure services"), it is simply to give them the tools to make them visible and filter out the noise so they can connect quickly and successfully with funders. To date entrepreneurs have been kissing a lot of frogs on their journey to securing finance and it is no longer necessary. With [big venture capitalists withdrawing funds](https://www.financedigest.com/with-big-bets-on-musk-these-funds-may-have-a-tesla-problem-in-23.html "With big bets on Musk, these funds may have a Tesla problem in ’23") for the time being, the nature of funding can evolve as networks open to greater diversity, broader opportunities and ultimately more profitable relationships. It’s [time for the funding](https://www.financedigest.com/female-founders-still-struggle-to-get-funded-time-to-rip-up-the-old-rulebook.html "Female Founders Still Struggle to Get Funded: Time To Rip Up The Old Rulebook") dating scene to change. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---