Finding investment partners for new business ventures

By Staff Reporter - 2 January 2020

Expert Voices

Launching a new business venture can be an exciting time. From the ‘eureka’ moment of the original idea to the hard work that goes into building a minimum viable product and beyond, developing a business can be a great, if arduous, process. However, while television programmes such as Dragons’ Den or The Apprentice might mask the process somewhat and create the illusion of glamour and prestige, building a business is actually extremely difficult – especially if you’re a first-time entrepreneur.

Securing the investment you need to make sure that you can get your product or service off the ground is the first key thing to think about – and it’s also often the thing that will make or break your business career. This article will explore how to find this kind of investment – and what to bear in mind when striking up a deal.

Networking and name recognition

For many people, networking is the only way to get to a point at which investment is free-flowing and accessible. All kinds of networking events exist in the UK and beyond, especially in major tech hub cities such as London and Manchester – and by heading to sites such as Meetup, you’ll be able to find where these are and head down to meet both potential investors and also other founders.

The advent of LinkedIn is also a way for investment to be found. It can be used in a proactive sense, to begin with: it’s possible for you as the person seeking investment to use it to uncover potential investors, and to send them tailored messages that allow you to become part of their network. It’s not advisable to send full pitches in this way – but by getting your name in front of people with investment capital behind them, you can be sure that they will know who you are and maybe even remember you if you pitch to them in the future.

However, remember that investors don’t always just wait for people to contact them: sometimes, they might contact founders! In this way, LinkedIn can also be used reactively: by keeping your profile filled out and updated on a regular basis, you can be sure to look as appealing as possible if investors decide to go looking for founders to support. Don’t forget to put some details about your start-up on there, as well as your unique selling point (USP). You can also use other websites that connect founders and investors, such as AngelList, for this purpose.

The hard graft

However, often the best way to go about seeking investment is to approach venture capital and other investment firms directly, and go through their competitive processes in order to see whether or not they will be capable of investing in you. Triangle Growth Partners, of which Lady Barbara Judge is an advisor, is just one of many firms that can provide both expertise and cash to the right firms in order to help them grow. For a founder, heading online to do some research is the first step in the journey.

Being wary

However, it’s also the case that being wary about your investment partner decisions is wise. That’s because there’s always a catch to an investment, whether it’s a noticeable one or not. Your investment partner may, for example, ask you to sign away a significant amount of equity in your business in return for the money – and you need to make a quick calculation as to whether or not that is something that you’re prepared to do. To do this, it’s worth thinking about what the value of your business might be in the future in a critical, objective way.

Is your business destined for big things if it is successful, such as an initial public offering? If so, signing away a large chunk of equity could still pose problems, but there will still be a lot of equity to go around. If your business is only ever likely to hit a certain level – perhaps because it’s not a scalable model – then you might want to be less comfortable with the idea of giving away a significant chunk of your business at this early stage. There’s no surefire way to uncover the exact balance – but by modelling the potential way that this could play out in the future, you’ll be able to make an educated guess.

Setting up a new business is fraught with difficulties – and not everyone manages to make it in the end. However, for some, working on a business project is a great way to be self-directed and fulfilled. By working to secure investment in the ways that are outlined above, you’ll be able to give your start-up the cash boost that it needs to get to the next level.

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