Business Angels / Investors - Advise Please
Discussion
Wow, I never considered that I would be in this position, but here I am.
I own my own company, running for almost two years, building a good repuation, client base and turn over in a technical and niche market.
I now have two major suppliers on board and I am thier only specialist wholesaler in the whole of the uk. With the projects and sales push they are planning I need to put both stock and people into the new office I have just moved to.
So my question is, who and what is the best form of business support / investment I should go for?
Taking more out of the House is not an option really.
Happy to listen from anyone.
Chris
I own my own company, running for almost two years, building a good repuation, client base and turn over in a technical and niche market.
I now have two major suppliers on board and I am thier only specialist wholesaler in the whole of the uk. With the projects and sales push they are planning I need to put both stock and people into the new office I have just moved to.
So my question is, who and what is the best form of business support / investment I should go for?
Taking more out of the House is not an option really.
Happy to listen from anyone.
Chris
I do not know how co-operative banks are in the UK at the mo' but in continental Europe it is next to impossible to get capital without you being able to stand 100% surety, which equates to: Yes Sir, you can have the loan as long as you can guarentee it 100% - which is precisely when you don't need the cash (and therefore them) anymore... So I'd say if you are looking for a professional investor, (i.e. a company or such) private equity or venture capital firms are probalby the way forward. Having said that, it depends on what volume you are looking for. The bigger names in professional private equity/ venture capital will most likely look for at least 1 million €'s or more and they will also want to see an exit strategy (will most likely be emission on stock market) which gurantees them a good rate of return from their perspective... Sometimes the price you pay for risk-capital can be quite high - it being interest or shares. They can also be inherently difficult to work with as in my experience even the most well reputed companies do not always hold up their end of the deal and might want to interfere with the way you run your business (not neccessarily the day to day running of your business but strategically). It is also not uncommon that you'll have to stand surety for at least a part of the funds.
You'll also have to keep in mind that from the point of "acquisition" of a potential proffessional investor to the money actually going into your company's accounts, 6 to 12 months could easily have passed... Also, these companies seem to keep you forever busy. I have had experiences with proffessional companies who ask for all sorts of info (always time consuming to put togehter) and in the end, they didn't even bother to let us know they weren't interested... All in all very time-consuming, plan well ahead.
Personally I'd look for a potent partner/individual. Much more uncomplicated, plus decision-making is much faster. Easier said than done - I'd say business-angel forums are a place to start. However I'd go for the ones which cooperate with banks and/or investment banks or simply have a sound reputation, as there are quite a few dodgy ones about - I have come across a few in my time, and as the process of acquisition depends largely on how you connect personally - I'd listen to your gut feeling as to how legitimate you feel the person is.
Although I understand that you are limiting your own personal risk (as every good businessman should) you might find that for small businesses, private funding might still be the best option.
If it is financially possible and you believe in your idea 100%, private funding will save you time, hassle and it will pay off in the end as it is only you who will benefit. At present I see little chance that you can raise the funds without having to gurantee for at least part of it, so I wouldn't outrule taking a loan on your house out completely...
No idea if that was of any help whatsoever
Well, I tried....
Best regards,
Felix
You'll also have to keep in mind that from the point of "acquisition" of a potential proffessional investor to the money actually going into your company's accounts, 6 to 12 months could easily have passed... Also, these companies seem to keep you forever busy. I have had experiences with proffessional companies who ask for all sorts of info (always time consuming to put togehter) and in the end, they didn't even bother to let us know they weren't interested... All in all very time-consuming, plan well ahead.
Personally I'd look for a potent partner/individual. Much more uncomplicated, plus decision-making is much faster. Easier said than done - I'd say business-angel forums are a place to start. However I'd go for the ones which cooperate with banks and/or investment banks or simply have a sound reputation, as there are quite a few dodgy ones about - I have come across a few in my time, and as the process of acquisition depends largely on how you connect personally - I'd listen to your gut feeling as to how legitimate you feel the person is.
Although I understand that you are limiting your own personal risk (as every good businessman should) you might find that for small businesses, private funding might still be the best option.
If it is financially possible and you believe in your idea 100%, private funding will save you time, hassle and it will pay off in the end as it is only you who will benefit. At present I see little chance that you can raise the funds without having to gurantee for at least part of it, so I wouldn't outrule taking a loan on your house out completely...
No idea if that was of any help whatsoever
Well, I tried.... Best regards,
Felix
Chris
I think you need to consider the amount that you require for this expansion (and the risks associated with it), is it short or long term?
If its short term and less than 100K then I would look at raising the cash yourself, you then remain in total control, you can raise money against your existing stock or by factoring/invoice discounting or loan (or dare I ay it sell the VX220!). You may be able to renegotiate terms with your suppliers to get better payment terms and squeeze your clients the opposite way. I was a director of a company we grew for £0 to nearly £2m t/o in less than 3 years taking this approach. Looking at your website suggests to me you are in this t/o band. BTW you need to update the address on the Coampnay Profile download!
Any business angel/investor will go through your company history and plans in fine detail (which is no bad thing), but invariably these operations take a few months (and can have (very) significant legal costs). Also you need to think very carefully about exit strategies for the angel/investor. Most angels are looking for medium to long term committment and some can provide an element of sweat equity, where they will work for equity! Having an angel who is active can be good, as it shows they want to look after their interests (and effectively yours) and ideas can be bounced off them.
If you are looking for large amounts of funding >£500k then you need to be looking at VCs or VC Trusts. These type of investors are typically looking for short term (less than 3 years) gains and are very keen on exit strategies!!!
Hope that helps
davidy
I think you need to consider the amount that you require for this expansion (and the risks associated with it), is it short or long term?
If its short term and less than 100K then I would look at raising the cash yourself, you then remain in total control, you can raise money against your existing stock or by factoring/invoice discounting or loan (or dare I ay it sell the VX220!). You may be able to renegotiate terms with your suppliers to get better payment terms and squeeze your clients the opposite way. I was a director of a company we grew for £0 to nearly £2m t/o in less than 3 years taking this approach. Looking at your website suggests to me you are in this t/o band. BTW you need to update the address on the Coampnay Profile download!
Any business angel/investor will go through your company history and plans in fine detail (which is no bad thing), but invariably these operations take a few months (and can have (very) significant legal costs). Also you need to think very carefully about exit strategies for the angel/investor. Most angels are looking for medium to long term committment and some can provide an element of sweat equity, where they will work for equity! Having an angel who is active can be good, as it shows they want to look after their interests (and effectively yours) and ideas can be bounced off them.
If you are looking for large amounts of funding >£500k then you need to be looking at VCs or VC Trusts. These type of investors are typically looking for short term (less than 3 years) gains and are very keen on exit strategies!!!
Hope that helps
davidy
Thanks for your advise so far.
I can say the VX has gone, a year a go, It raised capital and give me more space for kit (must update profile). I also need to sit down and talk it through properly with wify as to taking more out of the property for private funding.
Ideally looking for 50K which I thought a independant invester would be interested in for either a share in of the company or a good regular dividen.
I can say the VX has gone, a year a go, It raised capital and give me more space for kit (must update profile). I also need to sit down and talk it through properly with wify as to taking more out of the property for private funding.
Ideally looking for 50K which I thought a independant invester would be interested in for either a share in of the company or a good regular dividen.
Hi vex,
50k pretty much rules out vc's and private equity companies. Finding an individual to fund in return for shares or dividend is not unreasonable. If you have brief/ unconfidential material, I can offer to pass it round, your business being abroad (from my point of view) doens't particularly help but worth a shot, you never know.
Another thing: Have you looked into European grants and such ?
50k pretty much rules out vc's and private equity companies. Finding an individual to fund in return for shares or dividend is not unreasonable. If you have brief/ unconfidential material, I can offer to pass it round, your business being abroad (from my point of view
) doens't particularly help but worth a shot, you never know. Another thing: Have you looked into European grants and such ?
vex
If you don't factor/invoice discount now, then I reckon you can get 50K out quite easily with possibly a small loan. Talk to an independent (non-bank) factorer who will factor both distributed goods and consultancy. This is what we did and grew very sucessfully.
At 50K I wouldn't go down the business angel route, you could spend 5-10K easily in legal fees alone!!
Just my 2p
davidy
If you don't factor/invoice discount now, then I reckon you can get 50K out quite easily with possibly a small loan. Talk to an independent (non-bank) factorer who will factor both distributed goods and consultancy. This is what we did and grew very sucessfully.
At 50K I wouldn't go down the business angel route, you could spend 5-10K easily in legal fees alone!!
Just my 2p
davidy
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