Looking For Outside Business Investors? Read This Informative Blog Article First

Looking For Outside Business Investors? Read This Informative Blog Article First

Annoyingly Money Doesn’t Grow On Trees…

If you need business finance for a new idea or start-up venture the big question is where to go for the money.

The odds are that your bank won’t want to know you unless you pledge your house as collateral, something that is a big risk and not advisable unless you have a penchant for sleeping in cardboard boxes in city centres.

The alternative is usually to approach friends or family and offer them a stake in the business. While this may solve your initial problem it can create a rift later on down the line, especially if you draw up your agreement on the back of a beer mat.

Relationships and interpersonal dynamics are critical, with emotions often intervening to skew the deal in favour of one of the parties, which can lead to resentment and damaging internecine conflict further down the line. It doesn’t mean it can’t work but you should make sure that all parties understand what is at stake.

Nowadays it is a lot easier to find external funding through various online platforms where business investors are looking to invest their money in start-ups or those looking to grow but these entail lots of time consuming preparatory work as you are trying to convince total strangers that your business is viable.

Ironically this is often a lot easier for a start up especially if it is a disruptive technology, as investors appreciate that it is very high risk, whereas an established business that is struggling or has run out of working capital is usually a bad bet.

Whatever you decide always remember that once the ink on the contract has dried it is a done deal. Once you have given shares to a 3rd party they are part-owners of your business and you cannot simply revoke them. Take legal advice and don’t be rushed into any decisions.

Any questions? Comment below!

Leave a comment