Getting Investment Into Your Business – Equity

Getting investment into your business can be crucial, whether it’s your own cash or someone else’s.

This article is all about how to bring angel investment into the business

Angel investment

Today, I’m going to look at how to bring angel investment into your business.

This is an equity investment, where you give shares to someone else in return for a wedge of cash which you then use to grow the business. Although you own a smaller share of the business, that share of the grown-up business is worth much more than if you still owned 100% of a little business.

Often you’ll find that someone you know already is happy to put in 10-50k, maybe more, in return for a share of your business. This might be someone in your family, a friend, a customer, or another business person you know through networking.

How to find angel investment

It’s worth asking around, even putting it on your website so that people know that you’re interested. 40% of angel investments come from people who already know the business owner.

Don’t be shy about asking people if they might be interested in being an angel investor for your company. Potential angel investors won’t know you’re looking for them unless you tell them.

If you don’t have any luck that way, you might try one of the organisations which broker angel investment. I’ve worked with clients who have had success through Angel’s Den and Finance South East, both of whom have courted groups of angels, and will sell the idea of investing in your business for you.

Be aware though, that this is only really worth doing if you need more than 100k of angel investment. By the time that you’ve paid the broker fees, and the lawyers, you’ll have probably spent about 10k.

What to take into account with angel investment

These are some of the areas I look at when I’m working with clients on bringing in angel investment:

  • A clear business plan which shows how the investor will get back at least 3 times their initial investment.
  • The recent growth of the business. Don’t allow the process of seeking investment to slow down your organic expansion, as you can make a much stronger case to an investor if your business is already growing.
  • I often suggest a mix of angel investment and bank finance – an investor will be much happier to invest if a bank has said they’ll lend half the money. Everyone likes to share the risk and back a horse which other people are betting on
  • I’ve also been able to introduce clients directly to investors, because I’m constantly networking to find opportunities for my clients, so I have my nose to the ground with right people.

I’ve also looked at how you can persuade the banks to lend you money next time, so make sure you don’t miss out by subscribing.

If your business wants to grow and you know that you need some money to develop, do feel free to get in touch for a chat about how I might be able to help.

Some more interesting articles about getting investment into your business

Other articles of interest about getting investment into your business are:

How Can I Make My Company Eligible For EIS?

How to give away shares in your business

Getting someone to invest in your business

Giving shares and equity away

What are growth shares?