For many people, setting up a business and being their own boss is the dream. Whilst few people will go on to make that dream a reality, those that do know just how much graft goes into starting your own company.

For most people, one of the biggest obstacles to starting a business can be the funding. Many entrepreneurs have brilliant ideas, fantastic teams and a detailed vision for the future…but what they lack is the capital to get their business off the ground.

Whilst many entrepreneurs will put their own money into their business, more often than not they’ll need to reach out to a private investor to raise some serious funds. Yet finding the right investor can be difficult; it takes a special sort of entrepreneur to part an investor with their cash. Don’t let that put you off, however. As an investor and entrepreneur myself, here’s 6 things I think you should consider when looking for an investor.

 

1.Ensure Your Business Is Ready

Before you consider bringing an investor on board, you need to be sure your business is ready to take that next step. Is your business ready to grow and develop? Do you have a clear vision for the future? There’s a lot of competition out there and if you’re going to successfully attract an investment, you need to be sure you know the direction of your business and how best to maximise your funding.

You only get one chance at making a good first impression and many investors will rarely consider hearing out the same entrepreneur for a second time. Ensuring you’re ready for this next stage avoids you looking unprepared or unreliable as a potential investment.

 

2.Sort Out Your Elevator Pitch

Whilst having the big details worked out behind the scenes is a must, perfecting your elevator pitch is equally as important for any budding entrepreneur- especially when you’re looking for an investor. An elevator pitch is a way for you to summarise your background, experience, and business quickly and effectively for people you don’t know. It has its name because it should be short enough to deliver during a brief elevator (lift to us Brits) ride.

Investors and business owners are busy people; you need to be able to grab their attention and impress them with your knowledge of the business world, as well as your industry, in a succinct and compelling way. This could lead to a more in-depth meeting, where you can then wow your potential investor with the finer print.  Is your product scalable? Is it disruptive? What makes it unique?

 

 3.Network, Network, Network

It’s a generic piece of advice for all businesses, but especially applicable to those looking for an investor. If you’re just starting out in the business world, establishing the right connections with the right people can help make your journey much easier; it could also help connect you with an investor.

These days, networking can occur in all shapes and sizes, from online to in-person. Attending local networking events can be a good way of getting your name out there and introducing you to people in your field and beyond. Many entrepreneurs will also use LinkedIn to connect with other professionals virtually- and can grow their network and brand online by posting regularly and reaching out via personal messaging.

 

4.Find the Right Investor for You

Before you approach a potential investor, you need to know what exactly it is you’re looking for; this will ultimately help you decide which route to go down and which type of investors to approach. If you’re looking solely for funding, without any hands-on advice or support, then a bank investment or Peer-to-Peer lending could be the best option for you.

If you’re looking to benefits from experience, knowledge, and connections, as well as financial backing, however, then an angel investor could be more suited to you. Establishing what it is you’re looking to get out of your investor can help you to look in the right places.

 

5.Prepare Your Paperwork

When the initial discussions are over and it’s time to get down to the finer details, most investors will want to see all the paperwork before they make an investment. This will include things like financial statements and valuations, as well as the ownership and legal structure of your business.

The documentation can often prove to be the dealbreaker for any investor, so make sure that everything is in order financially and legally. Honesty is always the best policy with these things. Presenting an overblown valuation, for example, is a big no-no.

Having this side of your pitch sorted in advance will ensure you can respond to any request for documentation quickly, reassuring your potential investor that you’re on top of everything.

 

6.Be Resilient

Finding a financial backer for your business can take time. Don’t be disheartened if your pitch is turned down by potential investors. It’s a tough market out there for start-ups and small businesses. It may take time and multiple rejections before you find the right investor who believes in you and your business.

Being open to feedback and constructive criticism can help you to fine-tune your business pitch and make improvements. Every rejection is simply a chance to reflect on your business proposal and pitching style. Don’t give up! Fortune favours the bold.

 

Different Types of Investors

There are many different types of investors to consider and determining which one is best for your business is essential. Each type of investor can bring something unique to the table, both in terms of funding and levels of support. So which type of investor would be best for your business?

 

Angel Investors

Also known as a private investor or angel funder, angel investors are individuals who offer start-up companies financial backing in exchange for business equity or royalties. Often business owners and entrepreneurs themselves, angel investors can provide business advice and connections, as well as the funding you require. This can be especially useful to business owners looking for extra support developing and growing their business.

Banks

Whilst banks are the classic go-to for business loans, they’re not always suited to businesses that are trying to get off the ground. To apply for a bank loan, you’ll first need to be able to provide proof of revenue stream, as well as offer up collateral.  This can make it difficult for smaller businesses or start-ups to get the funding they need. On top of this, a bank loan will occur additional interest each month, resulting in extra costs for your business.

Venture Capitalists

Similar to angel investors, venture capitalists can provide start-up money in return for equity. The difference here is that venture capitalists are often part of a venture capital firm and don’t use their own money for the investment. They can also expect a substantial return for their investment, as well as a large chunk of your business’s equity- they have their own investors to consider after all.

Peer-to-peer Lenders

Bypassing things like banks and credit unions, Peer-to-Peer (P2P) lending involves pairing up potential investors and borrowers through an online platform. This system allows borrowers to access a large pool of potential lenders, a convenient way of finding an investor for your business or start-up.  Investors on these platforms generally deal with lower amounts of money and charge higher interest rates than the bank. With these types of loans, there’s no obligation to hand over equity, but any late payments could end up affecting your credit score.

 

 

Which Investor sounds like the best option for you and your business? 

 

Are You Looking for an Angel Investor?

If you’re looking for an angel investor, then I’m always on the lookout for my next investment opportunity. Let me tell you a bit about myself.

Hi, I’m Matt Newing, businessman and entrepreneur. I’ve always had a passion for business and started out selling second-hand bicycles when I was at St.Helen’s college. From there, I was lucky enough to complete the Prince’s Trust Enterprise Programme and receive funding to set up my tech company, Elite Group.

I’ve since expanded my business portfolio into various areas such as property, data, SaaS and security, as well as minority and majority stakes in various public and private sector businesses. Investing in promising businesses at the ground level is one of the main ways I grow my profile. As such, I know my stuff as an investor and have helped various businesses grow and develop into the successful companies they are today.

 

 

 

 

If you’re looking for an angel investor then feel free to get in touch with me here.

 

Matt Newing is a self-made entrepreneur, investor, and philanthropist who’s always on the lookout for the latest and greatest business opportunities. If you have a business that needs taking to the next level, get in touch with Matt today.