Most entrepreneurs with ambitions to start their own business generally start by either funding the venture themselves or sourcing early stage investment from friends and family. This is what potential investors expect from very early stage start-up founders.
But if you need growth capital and friends and family are unable to help where do you turn? And how do you negotiate the terms? How can you value your business, pre-revenue? This is subject we tackled last week at one of our New Entrepreneurs Foundation speaker events where we were joined by some highly-experienced business investors, who shared their advice to an eager audience of budding and established entrepreneurs.
Here are some of the top pieces of advice our experts had for making your business investable, for meeting investors and securing investment.
• Use your network - As well as looking for investors in a more formal environment, you should always remember that anyone in your network could be a potential investor in you or your business idea. Most people, whether they are an investor-by-trade or not, are motivated by things they know a little bit about or are excited by, so the chances are, they could already be in your network
• Make use of available resources - There is lots of information out there that can help you find an investor - a simple Google search for 'Angel Investors' will throw up thousands of results. There's also plenty of guidance and information on how to approach investment, as a start-up business.
• Structure the deal - Think carefully about how you want to structure your investment deal, and stick to your guns. Make sure you know exactly how much you need and how you will spend the money. Wherever possible, it should be spent on creating or growing revenue streams.
• Negotiate a way in and out - Always have an exit strategy, for when things go well, and not so well. This is just as important as how you start off an investment.
• Fund-raising - Crowd-funding could be an option if you are looking purely for some capital, rather than someone who can help you strategically with the business, but this can take a bit more time and effort to raise what you need.
• Identify Trends - Investors tend to look for trends and get ahead of the market by investing early in something they believe has a lot of strong potential. When it comes to your business idea, you should be doing the same kind of research, and looking at where a particular market is going.
• Be Investable - Investors are not just investing in a company, product of concept. They are also investing in the people - so it's important that you represent yourself well, and select a good team to work with you. The most important qualities investors look for in a business owner are ambition, tenacity, and leadership.
Investment and investors can come in all sizes and guises, so if you are actively seeking investment, try to get as much exposure as possible, and really use your network to make connections to potential investors. Above all, always talk about your business in a positive way - you never know if the person you are talking to could be an investor, or can put you in touch with someone who would be interested in investing in your business!