“Cash combined with courage in a crisis is priceless” according to Warren Buffet. We have the crisis and it is deepening. For strong and not so strong businesses with courage now is the time to think of angel funding. The one advantage of selling equity is that you don’t pay interest on the sum invested and you get someone who has already been successful in your market area holding shares in your company. This means you can get expertise in areas such as sales, accounting or the technical side of your business from someone that has been in the sharp end and succeeded. In nine out of ten cases where an angel is actively involved in a company it leads to better outcomes and more profitable exits for everyone.
Angels can be found through networks that they are associated with, like Beer and Partners who have over 1,800 registered and active investors in their database plus investing companies with over £2.4bn available. However, in the case of the really successful networks an SME must be introduced by an “Associate” who will mentor the company and its proposition so that it presents itself in the best possible light.
Business angels, like everyone else in these difficult times, are very cautious. Out of 10 investments that they make, 5 fail to make the grade at the end of three years, 3 break even and 2 are high worth stars. It is of course the 2 stars that they look for and particularly so now. This emphasises the importance of expert assistance in presenting your case. Besides editing your business plan and Associate, who will always come from an expert background, will study your company and constructively groom you and your staff before presenting it to potential investors.
For SMEs that want to approach the market themselves or who want to understand exactly what is involved in raising funding, Capital Brokers offer one day workshops where delegates are shown how to interest potential investors, how to value their company and what to offer in exchange for funding as well as how to write that all important financial proposal.
May you live in Interesting Times is a Chinese curse not a blessing. Interesting Times might be hard for SMEs but there is money available for the right companies it is only a case of getting the offer right.
