Finding an investor is a big decision. Think of it like buying a car - Every model is going to get you from one place to the other, but they're not all made the same. The more money, the more gadgets (experience/contacts) but do you just need a run around to give your company that quick push from A to B?
Now on the face of it, investment looks like a one way street. Isn't it a case of cashing in and getting started? Your investor is getting a clear asset - a chunk of your company, profits, plus your name to add to his portfolio, while you get the cash injection.
But you can get more. And getting the most out of your investor is clever. You can make this work out better than just pennies and pounds. In fact, if you find the right guy, you could end up with the better end of the deal.
Now I'm not suggesting ripping anyone off here, but the decision to find an investor requires a great deal of consideration. An Angel Investor may seem great... Money given, handshake completed and you're waving him off with a cheque in your back pocket. But could you have managed to squeeze more out of him?
Now I don't mean more money, but maybe you could have increased his worth, added value to your connection? If, like me, you're a bit of a radical thinker, you need the right fit. Because the right approach can inspire a voice in even the most silent investor.
So to keep the deal sweet for both parties, I look ahead to find the right person long term. Starting with these four must-haves.
1. He Can Can Keep Up
I make huge changes, fast. Once an idea has hit me, inspiration takes over and I can't wait to get going. So I need someone who can keep up. Someone who knows my business and believes in it as much as I do. Someone who tells their friends about it in the pub for the 100th time, even though they're completely bored of hearing about it... Like mine.
Every time I want to add a feature to my business PeoplePerHour, it's an idea that hatches and grows fast. That's what makes us progressive and keeps us ahead of the curve! The last thing I need is someone who over-analyses and talks about risk assessment and back up plans. Forget it, I've already figured it out, no time to explain. Let's go!
So finding someone with the same pace, the same sense of urgency as you, is essential. Otherwise it's like running a race with a toddler. You feel like you sort of have to go slow, dumb things down. When all you really want to do is sprint for the finish line.
2. He's A Networker
Ok, imagine the typical movie-style image of an American High School. Can you see the cafeteria? The tables full of different kinds of sub-cultures and interests? Now you'd instantly try to get in with the Jocks, right? The Business Elite? No. You want the guy standing up, milling around and keeping in with them all.
Find a Networker. Someone who knows the Big Guys in the Top Jobs but also has an ear to the ground when it comes to up-coming talent. Build the value your investor can offer you by linking yourself to someone who's linked in. With the right circle of contacts, you'll have an invaluable pool of professionals at your fingertips. And you'll never go hungry again.
3. He's Hungry
The best way to find that investor is to find someone who has been in the market for a company like yours for quite some time. When I'm seeking an investment, I look at my recently expanded competitors. They'll have had a few hopefuls who will be simply livid that they missed out.
Ok, so they may have come a close second, but why? Maybe they simply weren't a personal fit. Perhaps it was a location thing. Things that you don't give a damn about but took that guy out of the running when it came to your competitor.
So find him, buy that man a beer and introduce yourself as just what he's been waiting for. He's primed to invest, hungry for the kill and ready to make the commitment, fast. Before somebody else snaps you up.
4. He's The Perfect Size
Size does matter. If you've got the perfect business, then you're in the driving seat and should have no end of options. People may say money is money, but choosing someone with a hefty portfolio of companies is not wise. Then again, neither is someone who has the capital but no connections.
A huge company with a range of thumbs in various pies may seem perfect. What resource doesn't he offer? But if he's looking to invest £20 Million and you're looking for £500k then you're essentially telling him how highly to value your company. Yes, you'll get a spot on his list, but you'll be at the bottom. And before you know it you're having a meaningful relationship with his secretary while he's out looking after his more important accounts.
Be the Goldilocks of investees. Look for someone who's not too big to get lost in, not too small to have no value other than cash, and you'll find someone that fits just right.