Finding the right investor
Discussion
Hello hive mind,
Could do with some guidance if anyone can help.
My employer (£70m t/o) has been really struggling and is going into administration, leaving around 200 unemployed and without wages. Not great.
I am a senior manager there and for the past year I’ve been responsible for a separate new product which we’ve launched and is actually doing really well. It’s a small percentage of the main company and was never going to be enough to save it.
I’m considering setting up on my own offering this product as we have a sales pipeline of over £2m. The margins are good (50%). I’d need to buy the manufacturing kit from the administrators and the raw material. I estimate somewhere in the region of £250k would be enough to set it up.
Loans are out of the question as it wouldn’t have any trading history and as I’ve just remortgaged I can’t get any cash out of the house.
What is the best way of finding someone who could fund such an enterprise in exchange for equity or alternatively a healthy return on the investment. I forecast we could do £700k in sales for the remaining of 2026.
Sorry for the rant. Any guidance would be much appreciated
Thanks
Could do with some guidance if anyone can help.
My employer (£70m t/o) has been really struggling and is going into administration, leaving around 200 unemployed and without wages. Not great.
I am a senior manager there and for the past year I’ve been responsible for a separate new product which we’ve launched and is actually doing really well. It’s a small percentage of the main company and was never going to be enough to save it.
I’m considering setting up on my own offering this product as we have a sales pipeline of over £2m. The margins are good (50%). I’d need to buy the manufacturing kit from the administrators and the raw material. I estimate somewhere in the region of £250k would be enough to set it up.
Loans are out of the question as it wouldn’t have any trading history and as I’ve just remortgaged I can’t get any cash out of the house.
What is the best way of finding someone who could fund such an enterprise in exchange for equity or alternatively a healthy return on the investment. I forecast we could do £700k in sales for the remaining of 2026.
Sorry for the rant. Any guidance would be much appreciated
Thanks
Forgive my cynicism but I always find is suspicious when someone who's only made one contribution on PH over the past couple of years suddenly drops something like this.... but I'm feeling benevolent this evening, so....
The product is not yours to sell.
If the company goes into administration, then the rights to the product are transferred to the administrator.
You will be able to buy the manufacturing gear from them but buying the rights to the product will be another.
Regardless of your involvement in the development of the product, if it were developed as part of your employment you have no claim to it (look up the guy who invented Post-It notes).
The administrator will of course be keen to sell the rights to the product. Any investor will want ownership equating to the percentage of the price that they pay. So if they stump up everything, the best you can hope for is a job working for the investor - perhaps a few percentage points of ownership on top. If you want any significant level of ownership, you will have to put your own skin in the game.
The product is not yours to sell.
If the company goes into administration, then the rights to the product are transferred to the administrator.
You will be able to buy the manufacturing gear from them but buying the rights to the product will be another.
Regardless of your involvement in the development of the product, if it were developed as part of your employment you have no claim to it (look up the guy who invented Post-It notes).
The administrator will of course be keen to sell the rights to the product. Any investor will want ownership equating to the percentage of the price that they pay. So if they stump up everything, the best you can hope for is a job working for the investor - perhaps a few percentage points of ownership on top. If you want any significant level of ownership, you will have to put your own skin in the game.
I tend not to contribute on PistonHeads but I enjoy reading various threads.
Administrator won’t be arsed about this bit. It’s a very small part of the mess they’ll be sorting out.
It’s not a unique product as such but there is a patent on it. Indications suggest they would be willing to offload the equipment, brand name and an IP for a very small amount of £.
Planning on putting some cash in obviously, just couldn’t manage the full amount. Was just wondering how people go about getting in touch with the right people
Administrator won’t be arsed about this bit. It’s a very small part of the mess they’ll be sorting out.
It’s not a unique product as such but there is a patent on it. Indications suggest they would be willing to offload the equipment, brand name and an IP for a very small amount of £.
Planning on putting some cash in obviously, just couldn’t manage the full amount. Was just wondering how people go about getting in touch with the right people
jwpepper said:
I tend not to contribute on PistonHeads but I enjoy reading various threads.
Fair dos - and apologies for my cynicism. Just that there's been a lot of odd posts from people that have joined for the sole purpose of raising a particular point many of which to me, seem a little suspicious. Glad you're not one of them! 
jwpepper said:
Administrator won t be arsed about this bit. It s a very small part of the mess they ll be sorting out.
It s not a unique product as such but there is a patent on it. Indications suggest they would be willing to offload the equipment, brand name and an IP for a very small amount of £.
Planning on putting some cash in obviously, just couldn t manage the full amount. Was just wondering how people go about getting in touch with the right people
Management Buyout firms is a good shout.It s not a unique product as such but there is a patent on it. Indications suggest they would be willing to offload the equipment, brand name and an IP for a very small amount of £.
Planning on putting some cash in obviously, just couldn t manage the full amount. Was just wondering how people go about getting in touch with the right people
May also be worth approaching the firm's accountants. They know the context and might have contacts across their professional networks.
Some local Chambers of Commerce have 'investor circles' that you could tap into.
Absent any specific recommendations, you could have a look here: https://www.ukprivatecapital.co.uk/membership/memb... and filter by sector.
At £250k a single, or small group of, private investors might be interested but either way, in addition to considering the product itself, you’ll need to anticipate some serious questions about whether you/your team has the knowledge and ability to set up and run a company.
Put in some work on a pitch deck to help crystallise your thoughts and crisply present the opportunity before you contact anyone: you’ll need it immediately available and won’t want to be scrabbling around trying to throw something together.
If you’ve just remortgaged you’ll need to think carefully about whether/how much income you need and when you need to receive it. Running out of runway would quite clearly be a bad thing.
Think carefully too about what you want from investment other than money.
At £250k a single, or small group of, private investors might be interested but either way, in addition to considering the product itself, you’ll need to anticipate some serious questions about whether you/your team has the knowledge and ability to set up and run a company.
Put in some work on a pitch deck to help crystallise your thoughts and crisply present the opportunity before you contact anyone: you’ll need it immediately available and won’t want to be scrabbling around trying to throw something together.
If you’ve just remortgaged you’ll need to think carefully about whether/how much income you need and when you need to receive it. Running out of runway would quite clearly be a bad thing.
Think carefully too about what you want from investment other than money.
Have you written a business plan? This would be the first thing any potential investor would want to see.
I led an MBO many years ago and had 4 investors who initially owned 49% of the business. As we hit our targets (business plan) their shareholding reduced (and mine increased) as the theoretical value of the business increased. When we sold, some years later, they obviously profited, which was fair enough as I couldn't have done it without their initial investment.
In your case, where you're not putting in any cash, it will be a bit harder to persuade others - but you might make a compelling case in the business plan, but obviously be prepared for equity discussions.
I led an MBO many years ago and had 4 investors who initially owned 49% of the business. As we hit our targets (business plan) their shareholding reduced (and mine increased) as the theoretical value of the business increased. When we sold, some years later, they obviously profited, which was fair enough as I couldn't have done it without their initial investment.
In your case, where you're not putting in any cash, it will be a bit harder to persuade others - but you might make a compelling case in the business plan, but obviously be prepared for equity discussions.
Yes business plan completed. Essentially it made sense when it was part of the bigger company. It definitely makes sense now when we’re going to boot strap it with a few less staff to start off with. Also, if we can get the stock cheaper than standard cost from the Admin then that’s a bonus as well (not included in the budget though).
Have no issues running the business, was just a bit green on financing privately as it’s something I’ve not done before. As it happens, putting some feelers out has had a good response so we’ll see how that pans out.
Thanks for the input 👍
Have no issues running the business, was just a bit green on financing privately as it’s something I’ve not done before. As it happens, putting some feelers out has had a good response so we’ll see how that pans out.
Thanks for the input 👍
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