05_-_Small_Business_without_Debt

They may be able to use these to help you manage your

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Unformatted text preview: nancial skills. They may be able to use these to help you manage your business more effectively. It is, however, important to choose an equity partner with whom you feel you can develop a good personal and working relationship. There will be setbacks as well as successes in the days ahead. The relationship must be able to withstand the stressful times as well as the good. You should also understand what your equity partner is looking for out of the deal: How quickly will they want to "exit"? Will they be able to help finance the business through the next stage of growth? Will they "add value" to your business? Sources Of Venture Capital The chief sources of venture capital are: Professional venture capitalists Professional venture capitalists manage funds, normally on behalf of institutional investors, which spee in purchasing the equity of growing businesses. They are highly selective about the investments they make and normally do not invest in amounts under £100,000 - but there are exceptions, particularly for seed investments in potentially high growth ventures. 9 Sources of Venture Capital under £250,000 Private investors There are a great many wealthy individuals searching for profitable investment opportunities in the UK. Before you accept an investment you must be sure that the investor can afford to lose the money if the worst should happen and that they understand the risk. Many of these investors have been successful in business themselves in the past and may be willing to assist in the management of your business. Typically they prefer to invest in a sector in which they have experience and will invest via the following schemes and organisations: Firms of stockbrokers, solicitors and accountants. Many of these firms have contacts with individuals in their local areas who may be in a position to invest in profitable businesses Agencies which spee in introducing investors to investment opportunities. There are an increasing number of intermediary organisations that help to put "business angels" in touch with suitable small businesses needing capital. These include banks, financial advisers, TECs, LECs and Local Enterprise Agencies. Remember that fund raising via a share issue is governed by detailed regulations and professional advice will always be required. Corporate investors Larger companies may invest in smaller businesses. This may mean a takeover or a partnership. Typically the larger business invests for solely commercial reasons but there are funds run by large companies who have other investment criteria, such as creating jobs in areas where the company has made redundancies. Enterprise Investment Scheme This scheme was introduced from 1 January 1994 to replace the Business Expansion Scheme (BES). It aims to help small businesses raise equity finance from outside investors by offering tax incentives to the investors and, at the same time, allowing them to take an active part as directors in the manag...
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