Equity Finance » Business Angels http://wearechangeci.org all about equity finance Thu, 25 Aug 2011 15:21:06 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 Private Investors and Equity Finance http://wearechangeci.org/equity-finance/private-investors-and-equity-finance-2 http://wearechangeci.org/equity-finance/private-investors-and-equity-finance-2#comments Thu, 28 Jan 2010 05:46:17 +0000 admin http://wearechangeci.org/?p=190

Private investors provide equity finance for business opportunity. They invest money into new and up-and-coming businesses; they have no preference in the industry sector that they invest in as they have a wide range of interests.

Private investors bring money to a business that is needed to move the business forward. As well as bringing in the required funding to get a business off the ground, a private investor will also provide your business with the skills and contacts that are needed to help your business progress.

2008 has, so far, not been extremely rewarding for private investors, which is why it is so important that you explore investments which are well positioned for a longer term favourable theme rather than those dependent on a highly unpredictable economic cycle.

With private investors some investors will invest passively, which means that after providing a company with the finance needed they will play a limited role within the company. In cases such as these the investors are usually professionals in medicine, law, real estate etc. Other investors however will want to be increasingly involved and will use their network and experience to drive your business. They will also want some type of control with business decisions.

When it comes to getting the help of an investor it is important to know that private investors have more confidence investing with people that they know so the fewer degrees of separation equals a greater chance of a deal being done. Before any deal is made it is important that you decide on the amount of capital needed as investors won’t be interested in guess work; they will want specific numbers.

The most common type of private investors are angel investors, otherwise known as business angels. These angel investors hold extremely high risk and require a very high return on investment. Due to the fact that a large percentage of angel investments are lost completely when early stage companies fail, private investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition.

There are many different ways to describe private investors; they have many names attached to them such as venture capitalists and business angels. These private investors are often retired entrepreneurs or executives. They can provide your business with valuable management advice and important contacts. Private investors are wealthy individuals who invest in high growth business.

Private investors are growing to be one of the most popular ways of gaining business finance. This is making equity finance overtake debt funding as the best way of funding your business. Private investors are really worth looking into if you are hoping to start your own business. You do however have to ensure that you have your business plan wrote to the highest standard if you want to attract the help of private investor as they will use your business plan to see if your business has a high chance of being successful.

]]> http://wearechangeci.org/equity-finance/private-investors-and-equity-finance-2/feed 0 Business Finance with Equity Finance http://wearechangeci.org/equity-finance/business-finance-with-equity-finance http://wearechangeci.org/equity-finance/business-finance-with-equity-finance#comments Mon, 28 Sep 2009 02:56:19 +0000 admin http://wearechangeci.org/equity-finance/business-finance-with-equity-finance It has been said that nearly 61% of businesses are launched with either private capital or capital that is invested into their business by family and friends but investment doesn’t have to stop with merely just your family and friends, which is why equity finance exists.

Equity finance is cash that is invested into your business in return for a share of your business. These investments of cash never have to be repaid and don’t have interest attached to them. Equity finance is true risk capital as there is no guarantee that the investor will get their money back at all and these investments are not tied to assets that can be removed from your business should it fail.

The way in which investors get a profit from their investment is the fact they have a share in your business. This share means that investors either get money that is generated either through a sale of the shares once the company has grown or through dividends, a discretionary payout to shareholders if the business does well.

There are several types of equity finance such as business angels and venture capitalists. Each type of equity finance varies in the amount of money that is available for investment and the process of completing the deal.

If your business can support a growth rate of a least 20% you are more likely to be able to get equity finance. If you can’t generate a growth rate of at least 20% in your business then you are unlikely to be able to gain equity finance. It is the idea of control and the prospect of higher returns if your business is successful that attracts people to invest in your business

Sadly however many people are still highly reluctant to seek the help of equity finance as they see the idea of it as ‘relinquishing control’ of their business. Many small businesses are especially reluctant if their business is growing fast. As a business owner you should ask yourself the following questions below making any decisions about choosing to use equity finance:

• Are you prepared to give up a share of your business as well as some of its control?

• Are you and your management team confident in the business and the products and services that are on offer?

• Does your business have a unique selling point?

• Do you have drive to grow your business?

• What industry experience and knowledge does your management team have?

You should also consider the following when it comes to obtaining equity finance:

• How much funding do you need?

• How much control are you hoping to retain?

• How long do you need your funds for?

Each business should investigate the options that are open to them when it comes to finance. Equity finance is medium to long term finance and is the perfect type of finance that is open to small businesses, especially if you are an entrepreneurial business. Entrepreneurial businesses are what private equity investors are mainly interested in. This is because they have aspirations and a high potential for growth.

If you are interested in the use of equity finance it is important that you speak to a financial team who can put you in touch with people who will be able to put you in touch with the right investors.


By: Helen Cox

]]> http://wearechangeci.org/equity-finance/business-finance-with-equity-finance/feed 0 Private Investors and Equity Finance http://wearechangeci.org/equity-finance/private-investors-and-equity-finance http://wearechangeci.org/equity-finance/private-investors-and-equity-finance#comments Sun, 27 Sep 2009 11:32:11 +0000 admin http://wearechangeci.org/equity-finance/private-investors-and-equity-finance Private investors provide equity finance for business opportunity. They invest money into new and up-and-coming businesses; they have no preference in the industry sector that they invest in as they have a wide range of interests.

Private investors bring money to a business that is needed to move the business forward. As well as bringing in the required funding to get a business off the ground, a private investor will also provide your business with the skills and contacts that are needed to help your business progress.

2008 has, so far, not been extremely rewarding for private investors, which is why it is so important that you explore investments which are well positioned for a longer term favourable theme rather than those dependent on a highly unpredictable economic cycle.

With private investors some investors will invest passively, which means that after providing a company with the finance needed they will play a limited role within the company. In cases such as these the investors are usually professionals in medicine, law, real estate etc. Other investors however will want to be increasingly involved and will use their network and experience to drive your business. They will also want some type of control with business decisions.

When it comes to getting the help of an investor it is important to know that private investors have more confidence investing with people that they know so the fewer degrees of separation equals a greater chance of a deal being done. Before any deal is made it is important that you decide on the amount of capital needed as investors won’t be interested in guess work; they will want specific numbers.

The most common type of private investors are angel investors, otherwise known as business angels. These angel investors hold extremely high risk and require a very high return on investment. Due to the fact that a large percentage of angel investments are lost completely when early stage companies fail, private investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition.

There are many different ways to describe private investors; they have many names attached to them such as venture capitalists and business angels. These private investors are often retired entrepreneurs or executives. They can provide your business with valuable management advice and important contacts. Private investors are wealthy individuals who invest in high growth business.

Private investors are growing to be one of the most popular ways of gaining business finance. This is making equity finance overtake debt funding as the best way of funding your business. Private investors are really worth looking into if you are hoping to start your own business. You do however have to ensure that you have your business plan wrote to the highest standard if you want to attract the help of private investor as they will use your business plan to see if your business has a high chance of being successful.


By: Helen Cox

]]> http://wearechangeci.org/equity-finance/private-investors-and-equity-finance/feed 0 Business Finance – Shares and Equity http://wearechangeci.org/equity-finance/business-finance-shares-and-equity http://wearechangeci.org/equity-finance/business-finance-shares-and-equity#comments Sun, 20 Sep 2009 16:03:28 +0000 admin http://wearechangeci.org/equity-finance/business-finance-shares-and-equity The term equity finance refers to share capital that is invested into a business for the medium to long term in return for a share of the ownership and in many cases an element of control over the running of the business. There are two main forms of equity finance available to businesses. These are business angels and venture capitalists. Equity finance is fast becoming one of the most popular ways of gaining start up finance for businesses.

Equity finance is the perfect example of true risk capital. This is because there is no guarantee that your investor will ever get there money back. Unlike lenders equity finance investors don’t normally have the rights to interest or to be repaid at a particular date. The way in which equity investors regain the money that they have invested into a company is through taking a share of the business and a percentage of the profit. It is because of this high risk involved in equity finance that if your business can not support growth rates of at least 20% you may not be able to attract equity funding. Equity investors are more likely to invest in someone they feel they can trust with a clear business plan and strategy.

As a business you need a clear business plan and strategy regardless of what type of business start up finance you are hoping to attract. You need a comprehensive business plan with a detailed marketing plan and your financial forecast. Your business plan needs to address issues such as how much funding you are going to need and how much control you are hoping to retain over your business. You also need to clearly state what you are using your business start up finance for as well as if your plans are realistic and if your venture is appropriate for outside funding. Whilst you are completing your business plan you also need to consider what potential investors may be concerned about. Without all of this; plus much more no potential investor will go near your business, planning is key if you are hoping to secure external funding.

If you are hoping to gain the financial help of an equity investor there are several questions that you need to keep in mind such as are you prepared to give up some of the shares within your business as well as part of the control over your business? Investors will expect to have some say in the way in which your business is run so you should be prepared for this. You also need to be confident in your business and the products and services that your business has to offer, one way in which you can do this is by identifying what your businesses unique selling point is. As well as this you also need to have the necessary industry skills and experience to drive your business.

For more information about what equity finance can do for your business get in touch with a business angel or venture capitalist today and they will advise you on what to do next.


By: Helen Cox

]]> http://wearechangeci.org/equity-finance/business-finance-shares-and-equity/feed 0 Business Angels and Your Start-up Finance http://wearechangeci.org/equity-finance/business-angels-and-your-start-up-finance http://wearechangeci.org/equity-finance/business-angels-and-your-start-up-finance#comments Tue, 01 Sep 2009 20:54:07 +0000 admin http://wearechangeci.org/equity-finance/business-angels-and-your-start-up-finance Business angels fall under the category of equity finance. They form the most popular form of equity finance and can truly do wonders for your business venture.

When it comes to starting up your own business the most important thing to sort out before anything else is your start-up business finance. You will need funding for your business before you even start trading. No matter what type of business you are planning to go into, whether you are selling a product or a service you will need to secure finance before you open your business up for trading.

Funding for your business can come in many forms, ensuring that you choose the one that is best for your business is the tricky part so here’s some helpful advice. Most new business fail due to incorrect funding with many making the mistake of turning to their bank for finance only to find out that the bank refuses to give them the capital they need and with many more finding out the hard way that they can’t keep up with repayments, which ends with them losing not only their business venture but typically their house that they thought was a good idea at the time to use as an asset to their bank loan.

You’re probably left thinking now ‘what am I going to do?’ well lucky for you there are people out their waiting to give you money for your business start-up funding that you, wait for it, don’t have to pay back! Who are these kind people I hear you cry, business angels of course. A business angel is a high net worth, wealthy individual who has already made their fortune through other business ventures. They are often retired individuals who invest their skills as well as capital into new and developing businesses. Business angels invest money into your business that you never have to pay back in return for a growth share of your business.

Business angels typically seek investments that will give them ten times more back than their original investment within five years of your business being active. They invest their own funds and usually invest between £10,000 and £750,000.

As well as cash, business angels can offer years of experience in the business world. Although some prefer to become a sleeping partner, others will get actively involved in your business from writing a marketing plan to taking the company through a flotation on the stock market.

Business angels will invest across most industry sectors and stages of business development. They tend to generally look for the following within your business as a basis of whether to go ahead with an investment:

• The expertise and track record of the management

• Your businesses competitive edge or unique selling point

• The characteristics and growth potential of the market

• Compatibility between the management, business proposal and their skills and investment preferences

If you do decide to choose the help of a business angel within your business start-up funding then you must ensure that the angel you choose is right for your business needs. You should choose a business angel that is best suited to the needs of your business.

It is also important to keep in mind that business angels tend to mainly invest locally and within a specialised area.


By: Helen Cox

]]> http://wearechangeci.org/equity-finance/business-angels-and-your-start-up-finance/feed 0 Business Angels and the Capital That You Need http://wearechangeci.org/equity-finance/business-angels-and-the-capital-that-you-need http://wearechangeci.org/equity-finance/business-angels-and-the-capital-that-you-need#comments Mon, 17 Aug 2009 04:35:48 +0000 admin http://wearechangeci.org/equity-finance/business-angels-and-the-capital-that-you-need Business angels are high net worth individuals; they form another way of gaining finance for businesses. Business angels form part of what is known as equity finance. This equity finance is money that is invested into a business that doesn’t need to be repaid. Business angels are one of the most popular forms of equity finance and in recent years more and more people are realising the benefits of using the help of a business angel.

Business angels are established entrepreneurs who have already built up their own business. They are typically men over the age of 35 but there are no strict guidelines as to who can and cannot become a business angel. The majority of these business angels make investments for financial reasons; however in many cases there are often other factors as to why business angels wish to make a contribution to a business. These reasons include things such as they wish to take part in the entrepreneurial process and to have the enjoyment of being part of a successful investment.

It has been estimated that business angels invest roughly £300 million every year into established and start-up businesses. It is also safe to say that the majority of these investments happen at the start-up stage of business rather than later on in business. Typically, Business Angels invest between £10,000 and £750,000 in an investment. Where larger amounts are invested in a business, this may be as part of a syndicate organised through personal contacts or a Business Angel Network.

When it comes to the type of business that business angels invest in it should be noted that business angels invest across most industry sectors and stages of business development; however many business angels especially invest in early and expansion stage businesses. Most business angels prefer to invest in companies within 100 miles of where they live or work. Investors in technology companies tend to be more prepared to travel longer distances. One thing that is certain is that business angels rarely have a connection with a company before they invest but they will often have experience of the industry sector that they will be getting involved with.

If you are either a start-up business who needs start-up finance or you are an established business who needs extra finance for a specific purpose then a business angel could be just what you are looking for. A business angel can bring not only money to a business but by using the help of a business angel you are also gaining help in the form of experience, contacts and additional skills to a company.

Not all businesses are often able to gain the help of a business angel. Your business/company has to have a decent history and you need to prove that you will be able to establish yourself. There are certain aspects that business angels will look at within your business to determine whether you are eligible to gain the help of a business angel. These aspects are things such as:

• The expertise and track record of the business founders and management team

• The competitive edge or unique selling point of the company

• The characteristics and growth potential of the market your business is in

• Compatibility between the management, business proposal and the business angel’s skills and investment preferences

• The financial commitment of the entrepreneur

If you are interested in gaining the help of a business angel it is important that you get in touch with a financial company who will be able to put you in touch with a business angel who will be able to possibly help your business.


By: Helen Cox

]]> http://wearechangeci.org/equity-finance/business-angels-and-the-capital-that-you-need/feed 0 Struggling to Find Finance for Your New Business Venture? http://wearechangeci.org/equity-finance/struggling-to-find-finance-for-your-new-business-venture http://wearechangeci.org/equity-finance/struggling-to-find-finance-for-your-new-business-venture#comments Mon, 27 Jul 2009 16:08:26 +0000 admin http://wearechangeci.org/equity-finance/struggling-to-find-finance-for-your-new-business-venture Are you struggling to find finance for your new business, but you can’t see a way of getting the finance well then you haven’t heard of Business Angels and Venture Capitalists have you!

You may have looked into bank loans, asked friends and family for a loan or looked into getting a few credit cards to pay for you to set your business up. If these have all come up unsuccessful or not possible then why not look into private investors like Business Angels or Venture Capitalists.

Business Angels are usually from an entrepreneurial background who knows what you’re going through and therefore can offer invaluable advice and the finance you require if your business catches their eye and you have a well planned and thorough business plan in place for them to see. A business plan will show them what your goals and objectives are for now and in a few years, what will your business do offer a service or sell a product, who your target audience will be children, adults, teenagers or the elderly or a mixture. It will also show the prices and how much money you require to start the business up and also the finance you require for things such as a property, computers, rent, other equipment and also staff wages if necessary.

Business Angels usually offer around £10,000 to £75,000 in finance, depending on what you require as well as how well they think your business will do. If they think your business is a success from the start there more likely to offer you more in the way of finance, as whatever they put into your business they will get back and more. The more successful your business is the more money they are likely to get back. Business Angels may work in an Angel Network or Angel Syndicate, this means angels will group together and this way they can offer you more in the way of finance, from £75,000 to £150,000.

Venture Capitalists are slightly different in the way there are usually from an entrepreneurial background like business angels and can offer around the same finance from £10,000 to £75,000, but instead of mainly taking a backseat on day to day decisions and management decisions venture capitalists like to have a director’s role within the company or be part of the management. Some venture capitalists like to take a hands on approach with their investment and be apart of the day to day running and management decisions, and they usually take a percentage share of the business to begin with.

If you’re looking to raise finance for your new business venture whatever it may be and you don’t want to pay high interest rates from banks and other sources of finance and your family and friends don’t have the financial backing you’re looking for, Business Angels and Venture Capitalists might be your answer. They will be able to offer you the finance you require at the time you require it if you present them with a thorough business plan and shows your drive and enthusiasm for your business to take off.


By: Jene Pedder

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