[Kinko]

About business plans: business plans constantly change especially when getting started up. Business plans can be a huge waste of time. I prefer the business model canvas. Its faster, more flexible and realistic.

Lets just say you want to start a company for lawn mowing. The number one thing to do is find clients and start working and making money. Without clients, the greatest business plan in the world will go no where.

If you have 100 million cash and want to start a huge corporation then you should still start by researching in depth who your clients are going to be. Who is the boss? The clients. Who is going to pay you the money? The clients.

[dispenser]

(09-24-2016 08:29 AM)H1N1 Wrote:  

(09-24-2016 07:21 AM)dispenser Wrote:  

@H1N1
How would a small business without connections go about getting investors?
I'd imagine it requires personal charm and good (business) presentation, but I'm not sure how or where these could be used.

That depends on a lot of things:

What industry are you in?
Are you pre-revenue?
Are you offering something 'disruptive' to the market?
What kind of money are you looking to raise?
What kind of investors do you want?

Different sources of capital will impose different things on you. Even if you get the money you're after, sometimes that can come at a hell of a price. VCs, for example, want to micromanage you - almost without exception. Or they want to merge you with someone else. They certainly want to sell you in a year or two's time, and they are looking for 10x+ return on capital invested in that time period.

For most people, if you don't have family connections, you can either go through angel networks where you can stand up in front of a large group of guys with £10-50k each to spend and pitch to them, or you could approach larger companies in your industry, who may want to take a strategic stake in your business. Generally though it seems that it is better if these guys come to you rather than you approaching them.

It is essential that your investors' interests are entirely aligned with your own. There are plenty of sources of capital where that won't be the case, and that could make your life a living hell.

I am just going through my first round of fund raising for my business and have quite a lot of offers from VC, industry and angels. If people are interested, I will try to write up a datasheet in a month or two when I'm done and can speak more authoritatively on the matter.

I'm pre-everything, at least a year from a test run. It's related to automation.

For investors, I'm more interested in finding a partner of some kind, someone who does not look at the situation very critically or cynically. Basically a naive person who will get their fair share, albeit less than would satisfy an experienced investor.

[H1N1]

(09-25-2016 04:27 PM)dispenser Wrote:  

(09-24-2016 08:29 AM)H1N1 Wrote:  

(09-24-2016 07:21 AM)dispenser Wrote:  

@H1N1
How would a small business without connections go about getting investors?
I'd imagine it requires personal charm and good (business) presentation, but I'm not sure how or where these could be used.

That depends on a lot of things:

What industry are you in?
Are you pre-revenue?
Are you offering something 'disruptive' to the market?
What kind of money are you looking to raise?
What kind of investors do you want?

Different sources of capital will impose different things on you. Even if you get the money you're after, sometimes that can come at a hell of a price. VCs, for example, want to micromanage you - almost without exception. Or they want to merge you with someone else. They certainly want to sell you in a year or two's time, and they are looking for 10x+ return on capital invested in that time period.

For most people, if you don't have family connections, you can either go through angel networks where you can stand up in front of a large group of guys with £10-50k each to spend and pitch to them, or you could approach larger companies in your industry, who may want to take a strategic stake in your business. Generally though it seems that it is better if these guys come to you rather than you approaching them.

It is essential that your investors' interests are entirely aligned with your own. There are plenty of sources of capital where that won't be the case, and that could make your life a living hell.

I am just going through my first round of fund raising for my business and have quite a lot of offers from VC, industry and angels. If people are interested, I will try to write up a datasheet in a month or two when I'm done and can speak more authoritatively on the matter.

I'm pre-everything, at least a year from a test run. It's related to automation.

For investors, I'm more interested in finding a partner of some kind, someone who does not look at the situation very critically or cynically. Basically a naive person who will get their fair share, albeit less than would satisfy an experienced investor.

You want a partner who is essentially ignorant? That seems relatively short sighted of you. Why would you deliberately choose a bad partner?

Here's the skinny on this, based on my experience to date:

You are trying to raise money from the kind of people who can cut you $100k+ cheques. These people are almost never naive. Anyone who has earned that money, knows what they are doing. 9 times out of ten, they probably know better than you what they are doing. Why would you start out a venture where you are essentially trying to con someone out of their money, yet tying your success in part at least to this person?

It would pay to think very hard about what the right kind of investor can bring to your business. Someone who has made a lot of money and built expertise you can use is worth their weight in gold. Someone who is going to write you a one off cheque is much more limited.

Noone who has made money themselves is going to go into a deal with you blind, unless they are immensely stupid, and again, why would you want someone like that involved with you?

[dispenser]

10-20K would suit me, and I don't mind if they didn't earn it themselves.

Why would I want a naive person to give me their money?
Reasons readily present themselves.

[H1N1]

(09-25-2016 04:59 PM)dispenser Wrote:  

10-20K would suit me, and I don't mind if they didn't earn it themselves.

Why would I want a naive person to give me their money?
Reasons readily present themselves.

For a guy who is a year away from being able to test something, you're still going to have to give up a lot of equity to someone who puts in 10-20k. It sounds like you're not working on this full time, have no overheads, and don't have any employees since that kind of money is basically chump change for anyone successful enough to be considered an investor. From the little you've said, I suspect you'd struggle to find even a naive guy who was prepared to take a punt. If you register as a company you may be able to get a small business overdraft - that's probably your best bet. I've met a lot of investors, and without fail they've all been high quality and shrewd. Perhaps you can find a load of people prepared to invest 1k, but they'll all want a few percent for it probably.

That's very short term thinking. If your business takes off, you will be stuck with this person. You may also need more funding down the line. If you appear, as you are here, to be acting like a con man, future investors may well be put off. Short term thinking like this can really sabotage you in the long run.

[dispenser]

My meaning was that I'm a year away from assembling an exhibit and then looking for investment.
The automation aspect means that very little space or manpower is required. I'd invest in it myself, but I have some private obligations that come first.

I think the word naive wasn't appropriate. I'd prefer to work with people who don't have any confidence in their ability to tug on my reins (wouldn't we all?,) and who don't understand risk as coldly as businessmen.

1K investors... I'm smalltime, but I'm not pitching in the local pub. That was originally what I was curious about - where would I pitch? This is a topic off the beaten track, and perhaps not the best one to ask an above-board professional.

Quote:

If your business takes off, you will be stuck with this person.

I hadn't considered that.

[H1N1]

(09-25-2016 05:34 PM)dispenser Wrote:  

My meaning was that I'm a year away from assembling an exhibit and then looking for investment.
The automation aspect means that very little space or manpower is required. I'd invest in it myself, but I have some private obligations that come first.

I think the word naive wasn't appropriate. I'd prefer to work with people who don't have any confidence in their ability to tug on my reins (wouldn't we all?,) and who don't understand risk as coldly as businessmen.

1K investors... I'm smalltime, but I'm not pitching in the local pub. That was originally what I was curious about - where would I pitch? This is a topic off the beaten track, and perhaps not the best one to ask an above-board professional.

Quote:

If your business takes off, you will be stuck with this person.

I hadn't considered that.

Ok, that's a little clearer.

Quote:

I'd invest in it myself, but I have some private obligations that come first.

Understood, but you can't have an investor know this. If you are making enough to comfortably invest 10-20k, but have 'private obligations' you are prioritising, however legitimate, it'll be a turn off to investors. They want to see that you are 100% committed and have made sacrifices yourself to bring it about. If you won't put in money they think you can afford, they will wonder why not.

Quote:

I think the word naive wasn't appropriate. I'd prefer to work with people who don't have any confidence in their ability to tug on my reins (wouldn't we all?,) and who don't understand risk as coldly as businessmen.

I understand this completely, but I think if that's the case (which it is) then you want the opposite kind of investor. Smart, shrewd, successful guys whose interests are fully aligned with your own will want to leave you alone to get on with it. You are much more likely to have the naive guy meddling, precisely because he doesn't understand or wants to feel like a high power guy. You certainly don't want people interfering, or placing onerous reporting requirements on you. However, the right investors won't do this, and they may well be able to offer you expertise and contacts which accelerate your success.

Quote:

1K investors... I'm smalltime, but I'm not pitching in the local pub. That was originally what I was curious about - where would I pitch? This is a topic off the beaten track, and perhaps not the best one to ask an above-board professional.

Honestly, for the money you're talking about, the local pub would be as good a place as any to raise it. The money you're talking about is chicken feed to anyone making over 150k p/a. If you don't know anyone like this, going to a high end bar and making friends with some high rollers wouldn't actually be a terrible way of perhaps finding an investor.

Fundamentally though, you're may well be way short in your estimates of what you need, especially if this is your first time doing something like this. R&D usually takes a lot longer and costs a lot more than most people realise. If you genuinely have a good idea potentially worth a lot of money, I would advise you to start looking for money now, and be planning to raise enough that you can afford to work on it to the exclusion of all else for the next 18 months. If you don't, and this is just a hobby, or the dreaded side-hustle, then I suspect you will struggle for investors. Noone wants to give any appreciable amount of money to someone who's just playing.

As for where to find investors - there is a lot of money around. Interest rates being what they are, there's no shortage of guys capable of writing £10-50k cheques who are looking for somewhere to put their money. When the time comes and you want investors, if you have a good idea then it probably would be as simple as talking to a few guys in nice suits in fancy bars to get the ball rolling.