Hopefully you have already read Part1 and Part2 of this series, if not click here
After going round and round the kill test, you have come out the other side and still believe in your idea after having to tortuously go through all the negativity and issues with it…great!
You now need to go and find someone who is prepared to believe in you and your idea and give their hard earned cash to you.
In order to find your perfect investor, you need to think about a few different things:
1. How much money do you need and what type of investor does that suit?
For example, if you are looking for less than £100,000 then an Angel investor is probably for you. These are wealthy individuals who use clever tax strategies to invest in small businesses and can offset some of the tax against the investment thereby reducing their risk.
If you are looking for over £100,000 then you are probably looking for either a syndicate of angel investors (sometimes called a micro or nano fund) or an institutional investor, i.e a company which invests money on behalf of the public (sometimes known as Private Equity)
2. Are you looking to give away equity, debt or both?
When you give away equity, you are giving away a percentage of your business. This may not sound like a big deal today as 100% of £0 is still £0, however you have been through the kill test and your idea is going to be a big success so when 100% of £5million is £5million, you wont be so eager to give away equity!
When you take on debt, you are basically borrowing money in the company which has to be paid back. The problem your company has today is that nobody is going to loan their money to your company without some kind of guarantee from you that if things go wrong they can get repaid from you personally… with your house on the line etc!
Most deals that are done in the investment arena are normally mixed with some equity and some debt. For example, if you are looking for £100,000, then an angel investor may say they want 30% of the business for £30k and provide a 3 year loan of £70,000 getting you to your magic number of £100k.
Once you have decided on what type of investor you want and what you are looking to give away in terms of equity and creation of debt, then you need to seek them out.
There are various platforms for meeting investors, but its always best to have a warm introduction.
Here are Fusion we work with a syndicate of High Net Worth individuals who are always on the look out for great businesses. Why not get in touch and see if we can help.