Overview
On the heels of angel investors in the U.S., European investors are increasing their interest in western techniques for venture funding.
Private Equity Becomes an Option
Too Small for the Venture Capital House or The Market. . ..
Too Exciting for the bespectacled Bank Manager. . . .
Too Poor to do it yourself . . . .
Life is tough for the UK Small Business man trying to raise the finance to fund that leap from the back shed to the factory.
But a new trend in the UK seems to bring an answer. Following on the tails of a similar trend in the USA, there has been a big growth in one alternative source of finance called Private Equity Funding.
This is finance from “business angels”, usually retired businessmen themselves, who are prepared to invest in the business on the strength of the entrepreneur’s business plan, their knowledge of the entrepreneur and the negotiations with him.
Whilst investing in small company is only marginally safer than betting on the horses and a lot less predictable, it is a lot more fun. For a stake you must be able to afford to lose, you have the chance to be involved with the running of an energetic little company but with somebody else suffering all that grind and backache you went through years ago.
And heck – companies like Microsoft must have had to start from somewhere.
Getting the right business plan to the right business angel is still a hit and miss process in the UK.
Still, things are moving slowly. There are now business angel networks who pool new opportunities and investment opportunity magazines like Capital Exchange.
A professional association called PEFA has been set up to “promote, regulate and maintain ethics and common standards” amongst professionals, like lawyers and accountants, working in private equity funding capital market to address the problems of fraud, disproportionate professional fees and poor standards.
This means that investors and entrepreneurs can know the right advisers to go to put the deal together.
But suppose you are trying to raise finance by selling your shares. You’ve a mean business plan. But what is the investor looking for when he looks through it’s pages? What will persuade him to whip out his cheque book?