One of the key reasons I wanted to study at Cambridge is its world-beating technology cluster and the opportunities that it provides. Just consider this – a town with a population of around 100,000 people that has over 1,500 science and technology-based companies – the ‘Cambridge Cluster’/’Silicon Fen’ is a truly impressive feat. It is a town where ideas become reality; where a group of bright-eyed students with an idea to change the world, can actually fulfil that promise. It is an ecosystem of ambitious students, supportive institutions and importantly, an active investor community.

One of the key barriers to starting a business is its funding. Unless you have a trust fund or a wealthy uncle it can be hard to finance and scale the operations behind your idea. Cambridge has a huge investor community – but what is the best time to get funding, what are the usual terms associated with investment and how do we chose the right investor? With those questions in mind, I recently organised a panel talk at Cambridge Judge Business School to help us understand early stage funding better.

I wanted to invite speakers from a range of backgrounds to provide a 360-degree view of the investment community, including leading angel and seed investors, entrepreneurs and past students. Our panel on the night included Jack Lang – a serial entrepreneur and angel investor, co-founder of Raspberry Pi and all-round Cambridge legend; John Yeomans, Chairman of the Cambridge Angels network; Bradley Hardiman, Investment Manager of Cambridge Enterprise; Goncalo de Vasconcelos, a former MBA student and founder of The Syndicate Room and Tom Miller, also a former MBA and founder of Cambridge Energy Partners which is currently on the Accelerator Programme at CJBS. Having such an esteemed panel highlights how eager the Cambridge community are to help each other, while the event attracted a full house at the business school, reflecting the widespread interest in entrepreneurship.

When is the best time to get funding?

The panel first discussed when the right time was for investment. Jack Lang was of the opinion that funding should initially come from customers. John believed that you should only take on money when you really need to – when you have exhausted all your other options and you need to give up part of your business to help take it to the next level. Bradley explained that you should first take your time to plan through the business as once you take on investment you will be limited in your options given that you have another powerful stakeholder. Goncalo also agreed that you should try to avoid giving up equity unless you really need it. While Tom asked us to consider what you need the money for – if it’s to pay yourself a salary, it is not the best option. However, if it is to help bring someone on board, getting “smart-money” as he called it, then it can be good to utilise their networks and mentorship, which brings benefits way beyond the quantum of money received.

The investor – entrepreneur match

The panel then discussed what investors look for in entrepreneurs. John believed that the people and team are by far the most important factor. He needs to see the team working together effectively and meeting targets and project timelines. Furthermore the product has to be proven to meet the customer’s problem. Finally he said that the business model and plan must be clear and concise. Bradley argued the important factor is the relationship and trust between the business founder and the investor – there has to be a connection. Goncalo explained that early stage investments tend to be made on a personal level. Make sure you generate a personal relationship with investors well ahead of seeking investment. Jack Lang said it is all about trust and risk. The biggest risk is market risk, and one that you can’t control. He wants to see that the market is there, that your business is defensible and that you have the people to help deliver it.

So I invite you to listen to the full talk below – there was far too much detail to capture in this short blog. It was a fascinating insight into the thought process behind investors and you may benefit from their view of investments. They further discuss the terms that are usually agreed, how to negotiate them and examples of past investments. The former MBA students and entrepreneurs give insights into their experiences and advice on how to pursue your business. Finally there’s some illuminating questions from the audience such as how people deal with failure and what makes a good entrepreneur.

We are planning further talks in the future with other esteemed members of the Cambridge business ecosystem. We hope that they will continue to educate and inspire us, as this panel did.