Ahead of this week’s GRIF Deal Den, investors explain what they look for from start-ups
Food and beverage entrepreneurs looking to launch their first venture or scale up their business could find investors at a Dubai event this week.
In a start-up event described as being similar to the BBC’s Dragons’ Den concept, entrepreneurs will be able to pitch their ideas to a panel of investors in exchange for an injection of finance and/or knowledge, say organisers of the annual Global Restaurant Investment Forum (GRIF). The event, which takes place until March 14 at the Palazzo Versace Dubai, aims to understand the disruptive factors impacting the industry’s growth and internationalisation.
The GRIF Deal Den takes place on March 14. Now in its third year, the event has seen three ventures funded over the past two editions. Organisers were unable to provide a dollar figure.
“I’ll be looking for opportunities that fit into what today’s market is looking for — no longer burgers and pizzas, but fresher, healthier, modern styles of cuisine ,” says Martin Sherwood, one of the three panellists at the event. A partner at Enterprise Investment Partners, he works closely with a range of hospitality and leisure entrepreneurs and is a serial investor in his own right.
Also on the panel are Paul Campbell, Founder of Hill Capital Partners and an investor in brands such as Hawksmoor, Vinoteca and Gusto, and Sami Daud, Managing Director of the Oman-based Daud Group and Founder of Gourmet Gulf, which owns the franchises for brands such as Yo! Sushi, Gourmet Burger Kitchen, Morelli’s Gelato and California Pizza Kitchen.
Those looking to turn a restaurant business plan into a reality must demonstrate a commitment to the business, ideally by investing their own money, Sherwood says. In addition, food entrepreneurs need a strong understanding of the importance of hospitality, the ability to communicate the essence of the business to staff and customers, and a grasp of social media. He also looks for people who are able to associate their personalities with their restaurants.
Sherwood lists the most common mistakes made by entrepreneurs new to the F&B industry: “A lack of financial and time commitment — letting staff and other people run things their own way, launching concepts that don’t travel, and not acting fast enough when things go wrong.”
Conversely, Campbell believes there is such a thing as too much investment. “Spending far too much money on the first restaurant is the most common mistake made by entrepreneurs new to the F&B industry.”
So what should a funding presentation look like? Sherwood says the best one he received featured beautifully clear and gorgeous photography, a compelling concept, the ability to convey the intended customer experience and a realistic roll-out plan and valuation.
Campbell says, “There have been so many terrible pitches unfortunately — usually crazy, niche cuisines with limited customer appeal.” The most impressive F&B pitch he received was from his lawyer: “One of my lawyers quit his corporate job and pitched a new restaurant idea that had been fully researched and well thought through. The fact he quit his lucrative career told me he had the guts and determination to succeed.”
5 questions for F&B investment pitches from Martin Sherwood
1. Is it simple? Clear, simple slides which make it clear from the outset what the concept it is – it may sound obvious but so often, you get halfway into a presentation and have no understanding of what the product actually is!
2. Is the concept tried and tested? That means a thorough trial in a variety of different locations, lots of relevant trading experience and feedback from customers.
3. Is it scalable? Very often, small start-ups involve one or two people doing everything, and there is no clear vision of how the business can be expanded.
4. Is the time plan realistic? You cannot go from $0 to $1m (Dh3.67 million) in year one, $5m in year two, $10m in year three etc… businesses just don’t grow like that.
5. How much investment are you seeking for what % of the business, i.e. what’s the valuation? Many presentations leave out this vital info.