This might be more relevant to young entrepreneurs looking to raise finance. So a question asked often at young entrepreneur seminars is: “How can I raise finance?”

I thought I’ll try and answer this question here. So if you are looking to raise finance through traditional investment routes like VC (Venture Capitalists) or institutional investors it takes a long time. 4-6 months before you will see a penny from any investor. If this didn’t discourage you yet, read this: most VCs look for your track record in running businesses. Excellent A levels or university degree is not enough
But there is a solution. There is another category of investors = established businesses and entrepreneurs. Many successful businesses have pre-existing relationships with clients and a decent cash flow to invest in young startups. For them its an opportunity to:

1. Reinvent their business and add an extra arm
2. Bring in young talent to take their business/group/empire forward

From memory I remember the first internship I ever did with Dazdaq Ltd as programmer was a similar arrangement. Kwiqq was also funded by another business the E3 Group.

The advantages of choosing a business/entrepreneur over institutional investment :

1. Human touch: Having a company investing in you as a entrepreneur/business implies there is direct correspondence with the entrepreneur/executive team.
2. Contacts: They obviously have years of experience and contacts which can add value to your business. Things like setting up bank accounts, legal/accounts etc help is then easier to find
3. Office space: Some companies have a spare room for hire. This not only saves you pennies but also look big right from the word go.
4. Access to VCs: When you have a company with pre-existing relationships and financial records backing you, suddenly VCs and Angel networks look at your business favorably.

So how do I find such companies ?

• Networking especially in your own industry. Companies who understand your business and industry are more likely to invest in you and your business.
• Don’t feel shy in following up all contacts you make whilst at the networking events. You never know who is thinking about helping you out

Tips

• Make sure your marketing material especially your website is upto date. It should look professional
• Inspire people around you about your passion and belief in the product
• Ideas which are new age and at times a little wacky are good. What I mean is don’t expect someone to back you with an idea which has been implemented a million times before.
• Keep developing your product, don’t make the mistake of spending (full) 6 months writing a business plan. People like to touch and feel stuff as oppose to detail business plans.

If you have tips feel free to share with other budding entrepreneurs by leaving a comment

Tags: youngentrepreneurs, institutional investors, Venture Capitalist