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The key to a finding a good investor for your business

The key to a finding a good investor for your business

At some stage, most successful businesses will need outside investment. This might be in the form of seed money to actually get a project off the ground, or it might come at a point where expansion is necessary. In any case, it isn’t simply about finding a source of funding. Bringing the right investor on board can be a make or break decision for the future of the business.

money

So how should you go about finding a good investor?

Aligned values

A values-aligned investor is essentially someone who understands and shares the overall ethos of the business. Strategic goals and the tactics used to achieve them need to be agreed by all parties, and if your company has a strong ethical or social basis this can be a particularly important factor when it comes to choosing an investor.

Added value

Many investors like to know they are genuinely enabling new entrepreneurs to achieve their goals, and as such they are willing to bring more than just money to the table. An “added value” investor is one who will be only too happy to share his or her networking abilities and contacts to open doors and help a company fulfil its potential.

Due diligence

Any investor will conduct due diligence before they come to a decision on whether to offer you funding, but that doesn’t mean that it shouldn’t be a two-way street. Your own research into any potential investor should be extensive, then you can make an informed decision as to whether or not you see a beneficial working relationship being built up.

Be attractive

Of course, you might have the idea or the project and even have found the ideal investor, but you still need to persuade them it’s a good move. A solid business model and plan, a coherent marketing strategy and a team that know what they’re doing and work well together are three very basic essentials that you must have in place.

It’s also worth remembering that an investment is often made as much in people as it is in ideas or products. If you don’t make a personal connection or don’t think your own personnel and your investor will be able to get along, there’s little doubt that the wrong choice will come back to haunt you at a later date.

Negotiation

An investment deal is subject to negotiation, just like any other deal. The way in which the details are hammered out can be as important an indicator to long-term success as any other factor. By looking at how other deals are done, such as when Charterhouse take stake in consultancy, you can get a good idea of how a mutually beneficial agreement can be reached.

The long view

Hooking up with an investor isn’t the same as receiving a grant or taking out a loan. There are many more advantages as long as you choose wisely, but it is also important to remember that saying yes to the wrong investor just because you need money can lead to problems further down the line.

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