You won't get investment because...

[Mark T Jones]

Aimed at all those posters who come here looking for investment.

Investment is a serious business; investors are busy people. Very busy indeed. They also place great value on their time. They are literally inundated with random propositions (I'm not an investor, and even I get my fair share) - most of which remain unopened.

The very fact that you have come on here tells me that you aren't investment ready, because:

• You have to appear investable. Time after time this comes up - investors invest primarily in people. Not ideas - they are 10 a penny. They also look for a viable business with proof of concept, revenues etc- but far more important is you - the person who is going to drive their business to success. They don't want to pity you, nor do they want to think you believe the world owes them a living. They want to see and hear a strong, motivated, business-minded person who can go through good times and bad to make the business a success.

• You have to have done your research. Not just on your business itself (more later..), but on investment and investors. 'Which is better, loan or investment?' is the type of question you ask in the research phase, not when you are pitching for investment. That just makes you look like an amateur. Investors are individuals with - often large - egos. They want to know how you have selected them as a likely partner - what synergies there might be between your business and theirs. Similarly, they want a sensible proposition on the table. To achieve that you have to have put a realistic valuation on your business - slightly optimistic is normal - wildly optimistic will go straight to the shredder.

• You have to have an exit. Investors are in it for the money, plain and simple. They make money in 3 ways:

1. Management / consultancy fees.
2. Dividends.
3. Exit.

They will set their own fees, which will vary dependent on the required input.

Your plan needs to realistically show how they will earn dividends, and above all how they will get their big pay day on exit - trade sale, flotation, MBO etc - as a rule they will be looking to at least treble their investment in 3 - 5 years.

• You have to have a sensible business plan. Not a glossy 100 page 'sales prospectus / product description / work of fiction', but a straight forward functioning plan which clearly shows how the business will operate, what the significant steps will be to achieving smart goals, a sensible cashflow projection showing both the need for finance and the return to your investor. When questioned, you need t fully understand your plan, so if you do pay a professional to do it, you must be closely involved.

So, by all means come on here to ask questions about investment, or ho to put your strategy together - but posting half-baked investment request will only mark you out as an amateur, a chancer and - ultimately - uninvestable.​

 

[JEREMY HAWKE]

I will also add that you do not know who is reading and watching here

I wont say much(privacy is paramount) but we do know that an investor that most people would like to work with reads this along with at least two MPs

So unlike most of us here it is very important how you present yourself online

 

[The Secret Strategist]

Nice article.

I was speaking to an investor a few weeks ago who said she always looks to achieve deals which are 60/60 split. Both parties need to feel they are getting the better deal. She said you’d be surprised on the amount of business’s that want her money yet expect her to not be involved at all.

I suppose the key thing for businesses to consider is the difference between engaging with an investor or simply applying for a bank loan. There is a difference & people need to be mindful of that.

 

[Mark T Jones]

Nice article.

I was speaking to an investor a few weeks ago who said she always looks to achieve deals which are 60/60 split. Both parties need to feel they are getting the better deal. She said you’d be surprised on the amount of business’s that want her money yet expect her to not be involved at all.

I suppose the key thing for businesses to consider is the difference between engaging with an investor or simply applying for a bank loan. There is a difference & people need to be mindful of that.

Very true - investors are people, not cash machines; investees must understand that they are entering into a relationship, not just a transaction.

 

[Mr D]

Very true - investors are people, not cash machines; investees must understand that they are entering into a relationship, not just a transaction.

Have lost count of the starry eyed business people who think they can ask for £30k, it won't cost them a penny and they'll get that £30k up front in a couple of weeks then the investor will sit back and wait for the dividend cheque in a couple of years time.

Or the ones who want 100% of the expansion / startup / growth of the business being funded by other people. No skin in the game, nothing from FFF.

Reality as some of us know is .... different.

Came across someone on the forums last night who seemed unaware of paying legal costs. Winced when I saw it.

 

[Mark T Jones]

Came across someone on the forums last night who seemed unaware of paying legal costs. Winced when I saw it.

And got bolshy when you mentioned it LOL

 

[Mr D]

And got bolshy when you mentioned it LOL

Yes I noticed that.

Seriously it appears some want investors to be big versions of the local bank manager. Chat over a cup of tea, print paperwork, sign and you have the money in your account.

Or there used to be an advert for Carlsberg beer that suggested if they ran a bank they'd make things far better for you... probably the best lager in the world.
May colour some people's expectations.

 

[The next Steve Jobs]

Q ) Why do investors invest in people...mostly

A ) Because a 'switched on CEO' can create or run virtually any business

And that eliminates 90% of the investors risk 'right there and then

More importantly than that, a switched on CEO will have the instinctive vision required to scale nationally, and globally and can spot icebergs before they've even been created because they can see the future almost as clearly as the present


On rare occasions a company will have stumbled onto a winner but lacks the management skills and rescource base to maximise the companies potential... law of the lid...here a visionary investor can step in and effectivley scale the business with the originators yeilding some control in exchange for a slice of global profits.

 

[JEREMY HAWKE]

Q ) Why do investors invest in people...mostly

A ) Because a 'switched on CEO' can create or run virtually any business

And that eliminates 90% of the investors risk 'right there and then

More importantly than that, a switched on CEO will have the instinctive vision required to scale nationally, and globally and can spot icebergs before they've even been created because they can see the future almost as clearly as the present

But surly this is the job of the local coastguard

 

[The next Steve Jobs]

I can assure you its the 'day job' of every truly successful investor and entrepreneur on the planet, lol

Our ability to predict the future sets us apart from the animals, some humans are more gifted than others .... my businesses plan extends out to 3500ad


... It's going to be a triple rainbow

 

[JEREMY HAWKE]

Thank you for that
I'm always keen to learn more

Is the coastguard gifted or does he just do that because he did not want to work in the coffee shop on the beach

 

[Mr D]

Can run virtually any business?

Great. There's a furniture restorer looking to sell his business a couple of weeks back. A switched on CEO should be able to do that.

Or there was a few months back a blacksmith shop going a few miles from me. owner retiring. Blacksmith work? A switched on CEO should be able to do that.

 

[The next Steve Jobs]

In the UK many coast guards are volunteers...in every society there are those who take pride in 'being the sheep dog's

1066 was the last time this island was invaded and overrun, since then succesive generations have INVESTED in institutions such as the fire service the NHS and of course 'Baywatch' .....rampant capitalism leads to rampant exploitation ... so sometimes it's better to invest in a nation than a company to do a particular job


Ps. Your living on a planet without an asteroid defence, our species needs to invest in a Panglobal organisation that will NEVER miss the ball...its extinction garanteed otherwise!

The cost amounts to approx £1 a year per person ....this figure remains true for global populations of 500 million to 50 billion ... that's my other day job, developing the global tech and infrastructure for an asteroid defence system.

 

[Mr D]

In the UK many coast guards are volunteers...in every society there are those who take pride in 'being the sheep dog's

1066 was the last time this island was invaded and overrun, since then succesive generations have INVESTED in institutions such as the fire service the NHS and of course 'Baywatch' .....rampant capitalism leads to rampant exploitation ... so sometimes it's better to invest in a nation than a company to do a particular job

Yes, even if the nation does a bad job of things. Hence the rise in private care providers with the support of a chunk of the public. Funded usually only in part by the NHS.
You got a hospice in your area or using the NHS end of life care system?

 

[Mark T Jones]

Can run virtually any business?

Great. There's a furniture restorer looking to sell his business a couple of weeks back. A switched on CEO should be able to do that.

Or there was a few months back a blacksmith shop going a few miles from me. owner retiring. Blacksmith work? A switched on CEO should be able to do that.

A switched on CEO could do these things because they run businesses and employ the skills to do the job. Which is really the point

 

[Mr D]

A switched on CEO could do these things because they run businesses and employ the skills to do the job. Which is really the point

Maybe I misread what the other poster was saying then.

 

[The next Steve Jobs]

Clarification

START UP CEO's need to be 'even more switched on' than those running established companies because early INVESTORS are specifically looking for ZERO TO HERO personality traits.

Bill Gates and Steve Jobs are poles apart personality wise, what counts is the right kind of personality for the specific tasks ahead, as the company grows rock stars give way to technocrats

I highly recommend watching THE PIRATES OF SILICON VALLEY if your involved in social tech, consumer tech and related global enterprises

 

[Mr D]

Good thing neither have zero to hero personality traits then. They'd have joined the uniformed services.

 

[JEREMY HAWKE]

Clarification

START UP CEO's need to be 'even more switched on' than those running established companies because early INVESTORS are specifically looking for ZERO TO HERO personality traits.

Bill Gates and Steve Jobs are poles apart personality wise, what counts is the right kind of personality for the specific tasks ahead, as the company grows rock stars give way to technocrats

I highly recommend watching THE PIRATES OF SILICON VALLEY if your involved in social tech, consumer tech and related global enterprises

My question to you is
You have just joined a business forum and made these statements

Did you not understand that even the dumbest members on here already knew that

Furthermore nobody on here wants to be like Jobs

He is dead !

 

[The next Steve Jobs]

Clarification

IF your the CEO of an established business then potential investors will want to see a clear paper trail and probably want to observe your workflow procedures. They will also want to get a good feel for how employee teams work together.

They will also be looking for potential 'barriers to scaling' and be keen to discuss 'workarounds'

Investors will also be taking stock of your mental flexibility and openness to new ideas, after all growth tends to involve a fair bit of change and it's the potential growth factors that they are attracted to in the first place.

 

[JEREMY HAWKE]

Having been on here for ten years now I consider myself lucky to have communicated with a couple of investors on here . I have learned a lot from them . Sometimes it is best to take along time to read what they are saying and study what they do .

In the real world none of the above apply
They are serious methodical people with their feet on the ground There is no text book or Mr or Mrs high life in fast lane It is not like anything you would see on dragons den
One could say it might be raelly boring where potential start ups looking for investment would have to put in a lot of very hard work to even get to talk about their idea !

I would not want to be putting that effort in to get investment from them and then to share my company with them
but ! 40 % of a decent deal better that 100% of nothing

 

[The next Steve Jobs]

THE CLASSIC MISTAKE

IF I HAD X MONEY I COULD BUILD Y BUSINESS

... and while there is nothing in the laws of physics preventing that that is NOT reason enough to go begging for hand outs from instituitional or professional investors ... 'friends fools and family', maybe! but those in the investment industry are looking for a combination of leverage, security, strategic value, market penetration, data access and a goodly bundle of added value according to THEIR wishlist.

IF you are the CEO of a highly leveraged start up your contract reads 'bonded labour'


I'm an investor and a start up CEO, i invest a large amount of time looking for and 'optomizing' investor benefits. Read that as hoops of fire, reshuffling the deck and inserting jokers / get out of jail free cards etc at pivotal points in the investor journey...maximizing future customer and employee rewards is also part of that process.

I work in the tech industry, software, hardware, social media, consumer products, corporate services. The nature of my particular sector means I've allready forgotten more than most people will ever want to know ! ... it's certainly not for the faint of heart or shy of mind !!!