You’ve developed your business and you’re ready to grow. It’s time to speak to an investor. But what makes the ideal candidate? And where do you find them?
Seeking investment, you’ll realise every investor is different. There are many types of finance to choose from, so consider why you’re involving an investor in the first place.
Once you’ve identified what you want, it’s time to find your investor. But where do you start?
To help you, we’ve pulled together some tips and guidance from investors themselves.
What investors can provide
Decide what support you need beyond the financial. Having an early idea of what you want from an investor will benefit you further down the line.
Though it might be tempting to take the first offer you receive, don’t! Meet a number of investors.
Most can give you more than money — they also bring experience, passion, an understanding of your sector, guidance and even friendship.
Meanwhile, potential investors will want you to tell them what makes your business stand out. They’ll be seeking a story, a vision they can buy in to.
“Investors bring the money but they also give support. So there needs to be chemistry – you need to get on. The key thing to remember is that some investors, like Angel Investors, aren’t going to exit for seven years or more. It can be a long relationship.”
|Rod Beer Strategic Relations Director, UKBAA|
Where to find your investor
Talk to your peers
Seek out other business owners and find out what worked for them. But don’t restrict yourself to like-for-like.
Just because a business isn’t identical to yours doesn’t mean you can’t learn from their experience when it comes to finance and investment.
If what your peers are telling you sounds good, ask them to introduce you to their investors. At this stage it’s about talking to as many people as possible.
“One big recommendation is to talk to other people and persuade them of your viability. Either they’ll invest, or they might know someone else who will.”
|Jenny Tooth Angel Investor and CEO, UKBAA|
Do some networking
Put the word out to your professional network. Attend industry-related events. As with so many of these things, it’s about making contacts and expanding your pool of potential investors.
“The more you get out there, the more you learn,” says David Mott, Chair of the Venture Capital Committee at British Private Equity & Venture Capital Association (BVCA).
“Get used to having conversations with investors. Train yourself — if you don’t have the skills already, then learn them. There’s no real magic to it, it’s graft.”
“Don’t underestimate the ability to share challenges with other businesses that aren’t necessarily operating in the same sector but are going through a similar business environment to yours.”
|Umerah Akram Head of ELITE UK & Global Business Development|
Once you’ve lined up meetings, think about your ambitions for growth. Ask yourself important questions, like how much do you need to make that growth happen?
Investors won’t necessarily look for a detailed business plan. However, they will expect you to have a clear idea of your business and where it’s going.
“Forward planning is so important,” says Jenny Tooth, Angel Investor and CEO of the UK Business Angels Association (UKBAA).
“You need to be very honest and upfront to keep the relationship strong. You must say how much you need and why you need it, as well as how much you’ll need in the future.”
If you’re looking for guidance on how to evaluate your business and prepare to meet investors, our checklist Are you ready for finance? could be a good place to start.
Then you can look forward to taking this exciting step into investment.