To fund a business isn't easy and where you will find appropriate funding can be a difficult conundrum. Generally you wont get (or want to obtain) funding from a High Street bank. The reason for this is that High Street Banks are not in the business of providing risk capital. Their job is to look after your money.
So, how do we go about raising funds to set-up our business or fund a business opportunity?
Raising capital for funding a business.
We recommend you read our Web page on the Formation of a Business. This particular page enters into detail about the planning and preparation required to attract business funding.
There are several routes to achieve funding for a businesses or business ideas. Not every funding route suits every business or business idea. Much of choosing a source to approach for funding has to do with how much money you need. Moreover, it also has a lot to do with how much equity you are prepared to part with, if any, in return for the funds your are seeking. This is often a shock to discover.
We recommend you read our Web page on the Formation of a Business. This particular page enters into detail about the planning and preparation required to attract business funding.
There are several routes to achieve funding for a businesses or business ideas. Not every funding route suits every business or business idea. Much of choosing a source to approach for funding has to do with how much money you need. Moreover, it also has a lot to do with how much equity you are prepared to part with, if any, in return for the funds your are seeking. This is often a shock to discover.
Investors want their pound of flesh in return for investing money into your business and this is hugely affected by the risk or chance of failure. Logically, the less risk, the less equity you need to consider parting with. However, your perception of risk is often very different to the investor's, as your perception is fuelled by your enthusiasm for your idea and the notion that it couldn't possibly fail. Your faith is to be admired but don't expect investors to share your faith without being lured by the chunk of equity.
Investment can come from private or public sectors. Some businesses, even at start-up, attract public money and the business starts it's life as a Public Company (PLC). Another business may be of existing Private Limited Company (Co. Ltd.) status and therefore has already a fairly high degree of business acumen and experience present on the board, consequently may be seeking a private investor who may even be a sleeping partner.*
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However, public investment is generally for larger investment opportunity and you will generally need to be considering a proportion of equity in return for the funds. There may well be other stipulations as well e.g. the investment source may insist that there is a Non Executive Director appointed to your board of directors. This would generally be to observe how the business is operated and provide advice in an attempt to protect the investment. A NED can also carry a hefty cost and this needs consideration. Notwithstanding this, an NED can be a valuable resource if you find the right one.
Private investment is often for smaller investment opportunities and this may come from another company or a single private investor. This option can be less complicated to achieve but can often still carry an equity burden.
With any investment you will have to weigh up the pros and cons of the value of the investor in addition to their funds.
Which ever route is taken there is a huge advantage to having a professional advisor on board throughout the process. This will carry a certain level of benefit due to your ability to attract another recognised professional at this critical stage, as well as the kudos this brings to the negotiating table.
An investor will generally be more attracted to an opportunity where the opportunity's management team has experience and knowledge from a professional that is not an integral/permanent part of their team. This gives the investor confidence.
There is not much more of value to add at this point. We hope the forgoing provides you with an understanding of the overall challenge and has also encouraged you to talk to Questmoney, if only for a general chat and that's FREE!
We can help and guide you. More importantly, we can avoid you making a bad decision and that alone carries huge value
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*A sleeping partner invests or loans funds without being involved in the running of the business, He or she may not require equity, simply to receive an income from the investment in the business can be adequate for some investors.