How SMEs can keep new investors happy

Posted by Akoni Hub
Posted on February 23, 2023 Leave a comment

As an entrepreneur who’s recently received funding, you’ll be eager to put your newly-acquired cash to work. 

After all, you’ve worked tirelessly for months, possibly even years, to secure the financing that’ll take your business to the next level. 

However, the biggest mistake you can make when the money hits your bank account is diverging from your game plan and going on a spending spree. 

Yes, you’ll have outlined exciting growth plans when you pitched to your investors. Yes, you’ll want to deliver on those promises. 

But no one will expect fireworks on day one - or even year one. 

While you may be tempted to make unplanned purchases following a large cash injection, such as buying new computers for your team or upgrading your office space, if that wasn’t part of the initial plan, don’t do it.

While you might feel the money is yours to spend as you like on the business, it’s worth remembering that investors are long-term partners. There’s every chance you might need more investment, advice and access to their business networks in the future to grow your business again, so it’s vital to maintain their trust and ensure they feel confident in your decisions.

Your investors will be far happier if you stick to the script, even if that means sitting on the cash until you’re ready to spend it according to the longer term plan that so impressed them.

They’ll be even more reassured if you can provide a detailed plan outlining where exactly you intend to house the money in the short term.

For this, you need to factor in two vital considerations: protection and interest

One: Protection 

Safeguarding your investment funds should be number one priority. It’s important you spread the money out across multiple banks and building societies to ensure you’re fully protected under the Financial Services Compensation Scheme (FSCS).

The FSCS protects savings of up to £85,000 per financial institution in the event a bank, building society or credit union goes bust. There’s also a measure to protect certain temporary high balances up to £1m for six months. 

The FSCS protects individuals’ wealth as well as company deposits. 

Until 2015, FSCS protection was only available to companies with fewer than 250 employees, a turnover of no more than £44m and a balance sheet of no more than £39m. However, these restrictions no longer apply.

Now, deposits from all companies, no matter their size, are safeguarded in the event their financial services provider should go bust. 

Two: Interest 

Another way to keep your investors happy is making sure the funds are earning as much interest as possible while they’re waiting to be spent, rather than leaving them to languish in savings accounts paying next to nothing.  

In today’s high inflationary, rising interest rate environment, there’s no excuse for earning meagre rates on your savings. There are competitive deals out there, if you look hard enough.

Typically, it’s not the big players offering these market-leading rates. In fact, despite ten base rate increases since December 2021, some major providers have yet to pass on a single penny to customers.

Challenger banks are offering the best rates in an effort to attract new customers. Time and time again they top the best buy tables across all account types - easy access, notice and term. 

If handing over big chunks of investment cash to a bank you’ve never heard of makes you nervous, don’t worry. Challenger banks need to abide by the same regulations as traditional banks and the vast majority are protected by the FSCS. 

Manage and monitor your cash in one place 

A simple way to make sure your funds are a) safe and b) earning as much interest as possible is by using a deposit aggregator. 

Deposit aggregators - or cash management platforms - allow you to view and manage your savings in one place, and seamlessly switch deals when a better one launches. 

Akoni’s cash management platform offers quick and easy access to a range of high paying accounts, all of which offer 100% FSCS protection. 

Of our 20 banking partners, 13 are challengers and two are building societies, so our providers are more likely to pay market-leading rates.

Your personalised dashboard allows you to view all your savings, wherever they’re held, at the same time to give you a complete picture. 

Setting up a free Akoni account takes just five minutes. Once you’re approved, all you have to do is fund the account, select the deals that meet your needs and we do the rest. No long application forms. Minimal paperwork. 

Ready to find out more about how Akoni’s award-winning platform can help keep your investors happy? Get in touch today.

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