Investor needed, any ideas?

[clairemackaness]

I am in the need for an investor and would appreciate your ideas on how I should move forwards.

I am looking to purchase a studio premises at which I can focus on my corporate art as well as run workshops in art and craft for dissadvantaged kids, disabled, elderly etc, etc...

The workshop part is easy enough to get of the ground with funding from the arts council, Local development agencies and the lottery, but initially I need the money to rent or purchase the premises and hire a business manager who had experience of bid writing to get the money for me, as well as sales to bring in the business for my corporate work.

I am prepared to share the profits obviously but would prefer to have a silent partner investing the initial start up costs. Once these have been paid back then I would like to offer a small percentage of profits for a limited number of years.

Does this sound reasonable? and if so how do I find this person?

[creospace]

Said with tongue firmly in cheek:- What do the cards say? :wink:

Hey at least I've not made any quilt jokes! :lol:

[DuaneJackson]

The first thing you need to do id work out very clearly on paper:

How much you need
What it will be spent on
Sales forecasts
And most importantly, an exit strategy for your potential Investor. ie: how and when will they get their money back?

Once you do this and still think you are a viable investment then seatch online for business angeel networks. I assume you are looking for less than £2m so the traditional VC's probably wont be interested.

[clairemackaness]

Thanks Duane, the first three items on your list I can cope with but I dont know about the 4th, that was my question, whats the norm?

I dont really want to use business angels as I would prefer to find an investor who was local and had a similar passion for my idea. I am always wary of large corporations.

[DuaneJackson]

I dont know about the 4th, that was my question, whats the norm?


I don't think there is a norm. This is something I've been trying to find out recently too.

Traditionally, with bigger companies you'd be looking at an AIM flotation or a Trade sell (selling your compnay to a competitior). I don't think this is what you'd want to be doing though even if it was viable.

From your sales forecasts, you should be able to work out how long it'll take you to pay back the initial amount borrowed.

Have you thought about how much of your company you'll be giving in return for the money?

You might want to consider a bank loan. It's a lot less hassle than dealing with investors.

[Steve Roberts]

Typically, an investor will be looking for a (circa) 20% return on investment - you can get 5% by leaving the money in the bank, which is risk-free. Investing in a business is high risk, so an investor will be looking for a far higher payback.

If I were you, I'd collate a business plan which gives:

The ROI is likely to be 20%+ because XXXXX;
It is low risk because XXXXX;
The timscales are XXXXX;
After X years, I will offer XX% equity.
I plan a Dividend policy of XXXXX.

[Cornish Steve]

I am looking to purchase a studio premises
Would you consider renting premises? This is a lot less risky.

[clairemackaness]

I would be renting premises initially, sorry for the confusion. I think your right a bank loan sounds far less daunting, but sadly my house is already mortgaged to the hilt and I dont really have the credit rating to get one.

The frustrating thing with all of this is that the business would be funded by external agencies and my corporate art work, but I just need intial set up costs. I could possibly get these from external funders as well, but I need to employ the person to do all the leg work as I cant afford to give up my job until the ompany is financed.

I'm in a bit of a catch 22

[MorethanWords]

Claire, I think that you should approach local papers with your idea first as this is a good way to generate local interest.

Also, there's a charity in Brentwood called SNAP which offers support to parents of children with special needs. They have loads of contacts and know about generating interest in such things as they've had to do it themselves.

One of the patrons is Lord Petre of Ingatestone who does absolutely loads of charity work locally (went to a wine tasting last week at Ingatestone hall through him).

The girls at SNAP are sooo helpful and they are in the process of changing venue to a permanent location instead of at Keys Hall. I'm sure if you could go in with your idea they'd be more than happy to help you.

As far as bidding for tenders goes, I haven't got loads of experience in that field (although I'm currently working on one for myself) but would willingly offer my services to help you raise cash for this venture.

L x

[clairemackaness]

Thanks Lu,

I have heard of SNAP as I used to live above Keys Hall.

I think I need to confirm my business plan before moving any further forward, but will pop along and see them at some point. Onc funding is received this would certainly be a good avenue to go down to attract youngsters to the workshops.

[FDB]

Hi Claire,
I know how hard it is when you need to expand as we've recently had similar issues with growth and financing and managing change in our business.
Firstly on the investor side of things:
There are basically 2 sorts you need to know about,
1) VC's These really are the big boys who are looking to invest at least 2mil + and will be looking at more corporate deals than you business maybe offering. (They also come in to the business and are all over you like a rash...something I gather you're not too keen on!)
2.) Business Angels - these tend to be business people who have been there, done it before and have made their money. They may be looking to just invest money or they could be looking to invest their time as well - which from your point of view may be of interest as you said you are having to look at employing a business manager and someone for sales.
Maybe an investment from a business angel who's willing to work in those capacities within the business maybe a better idea.
Also why are you having to employ these positions? Can your local business link not help you pull together a bid...for free? Or what about approaching a business mentor to help you do this - you'll learn an invaluable skill to boot if you do it this way!
Something we did which was successfull was to go back to our clients past and present and tell them that we were planing to franchise and we were going to sell "investor bricks" to build our business. We offered for sale house bricks for £5k each which offered a return of the inital investment in 5 years time plus 3 times the original investment on top or an offer of a conversion to shares instead when we float. (This final part is at our discretion) The second was a Yorkshire stone house brick for £10k each which was the same deal but with 4x the return instead. Our investors are all silent investors, but we got offers off 3 good business people to become non execs as well which we weren't expecting. This has really strengthened the business as no-one can ever be fantastic at every facet of business!! Maybe you could look at your clients to help you first as they already know and like your product. The only thing is you have to be clear about how the venture will make money and how and when the investors will get a return.
Again you could try placing an ad in the paper for local investors...
All the best with this Claire but if you ever want to ask me anything about this feel free to PM me. :D

[profitxchange]

I would suggest you talk to your local business link - they often manage a network of business angels, or should know how to advise you.

[clairemackaness]

Thanks for all your advice. I'll be in touch with Business Link this week.

My main issue is I am able to write bids as thats what I do for a living, however I dont have the time to write my own as well as my works!

[FDB]

Aha! I see. Misunderstanding on my part. What about taking on a business partner then so you can concentrate on working in the business and they can work on the business - they may also bring a financial input. What about teaming up with another artist in your area?