26th February 2020
Have you already found your footing as a business, but now you’re struggling to find investors? It seems a little unfair: you read about the latest Uber equivalent getting funding and yet, your business, with a solid revenue base, decent margins and minimal customer churn is struggling to even get in front of investors. The issue could be that you are searching for the wrong type of investor, which can be a product of the target investor’s involvement, and how quickly your business needs growth capital. Let’s dive into each of these aspects.
If you’re already operating as a successful business with good financials and a clear growth strategy, like The Chuckling Cheese Company, you probably aren’t looking for an involved investor right now. Some organisations are looking for investors who can provide them guidance or networks within their target market, these investors require cold outreach and a well-developed network.
If you’re looking for “uninvolved” investors, they’re looking for opportunities with good financials and good opportunities for growth, nothing more, nothing less. An uninvolved investor can still be a fantastic advocate for your business and believe in your vision, without needing to exert their opinion on how you should operate. To win over these investors you need to have a well-defined plan for success, a clear picture of your financials and a willingness to answer some high-level queries about your business.
Take this Q&A that The Chuckling Cheese Company fielded:
These investors aren’t looking for bucket loads of detail, but they do want to trust that you have a plan in mind and are clearly capable of operating your business effectively. Fortunately, Crowd2Fund provides the structure to provide the plan, financials and Q&A to a huge collection of keen investors.
The speed at which you need to close out your investment might change your approach. If you’re looking for a way to close your investment quickly, going through an institutional or VC equity financing approach will take time. In fact, due diligence from some equity investors can take months of work, and it must be remembered that such investments can fall over at almost any moment, right up to the point of signature.
If you have an exciting new prospect, perhaps a major new customer coming on board like Hotelfone, an expanding hotel reservation company, or a seasonal growth opportunity like Ecosse, who grow and sell luxury Christmas tree, you probably don’t have the time to delay getting more growth capital. A loan could be an option, and while going to a bank would be one approach, you might want to try a platform like Crowd2Fund. They’ll connect you efficiently with investors who will see past the bare financials and have the opportunity to buy into your business, as a business. This leads to better terms and more advocates, not to mention a platform of willing investors and the support of a team wanting to see you succeed.
Finding investors can be difficult, but having a clearer understanding of who you’re looking for, and why you’re looking for them will help to redefine your goal. Traditional investors looking to provide support and guidance, with the need to perform months of due diligence can be a viable investment strategy for many businesses. However, if you’re looking for a way to find keen, arms-length investors, with a quick turn around and a simple guided process, crowdfunding is an excellent alternative to finding the growth capital you need to succeed.
Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.