Are you at the stage of your startup venture where you are ready to continue growing your business and seek outside investment?
If so, congratulations – this is a massive step for any business to reach the stage of finding a business investor.
How to find an investor for my business in the UK?
You could try to find support from any angel group. However, if this is not appealing, there are many other ways to find the perfect investor for your startup.
Before you start trying to attract investors, it is important to ask yourself the following questions:
- How much money do I need?
- What do I want from an investor apart from funds (mentorship, contacts to get my product into particular shops, finding an investor who is prepared to involve themselves in the operation of the business)
- How much of my business am I prepared to give away in exchange for investment funds?
- Do I have a Shareholders’ Agreement in place?
- Is my business plan up-to-date?
- Do I have a persuasive pitch deck?
- Have I protected my intellectual property?
To minimise risk, investors want assurance that your business is organised, effective, and compliant with laws and regulations.
Ensuring all the above are in place before you approach angel investors or venture capitalists will increase your chances of success.
How to meet investors?
There are several ways to find your perfect investor, including:
- Ask other business owners in the same sector or who operate in a similar business environment
- Go to networking events and industry related events
- Attend pitching events (the UK Business Angels Association runs regular events, as does the British Private Equity & Venture Capital Association)
What types of investors can I find?
It's important to note that there are two types of angel funders – affiliated and non affiliated.
The affiliates are an acquaintance of the entrepreneur, like family and friends, who are the closest sources of angel funding. Therefore, they are easier to find.
Conversely, reaching a non-affiliated investor is difficult as they have no connections to your company.
Are you ready for equity financing?
You need to have the right business structure before you head down this route. For example, it isn’t suitable for sole traders.
Having a lot of shareholders might put off larger investors in the future. So consider carefully how many investors you want to take on board.
Before you commit to seeking funding this way, talk to a lawyer about the legal and financial implications of equity financing. Research and understand any current and upcoming regulations and laws you’ll need to comply with.
What makes a good investor for your business?
You need to make sure you select the right investor for your business.
Before you get on a deal with someone showing clashing interest, here are some qualities to look for. Ideally, they could be:
- Local – so you have access to them, and they don’t forget about you
- Experience in your industry – so you can draw on their expertise, enthusiasm and contacts
- Well-connected – so they can introduce you to the right people
- Committed – so they’re with you for the long haul
The right investor can offer more than just their money; they can share their experience and connect you with the right people to help your business grow. For they could introduce you to new customers, suitable suppliers, lawyers, accountants, bankers, other investors, business advisors, etc.
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Make sure you talk to many potential investors before making your final choice. Remember that finding the right business investor is not only about money; you want someone who shares your values and believes in your vision.
Although, there are specific ways to find angel investors for your business. One way is by approaching lawyers, investment bankers, accountants and other professional contacts who often hold contacts of private investors.
LawBite has experience helping startups and small business owners achieve their commercial ambitions. To find out how we help expand your business, book a free 15 minute consultation or call on 020 3808 8314.