I was recently invited to an event put on by Owen Clark of Byzhub. The speaker, Basil Peters, is an experienced Angel Investor who discussed opportunity for entrepreneurs seeking investors. For more than 5 years news outlets are predicting D-Day, the lack of financial support for Small Business owners, which would cripple the economic growth. As Peters says, it couldn’t be further from the truth; his years of experience, logic, and network of fellow investors proves more compelling than media conglomerates interested in selling stories.

The topic was entitled: Raising Money for your business? It’s easy if you know how!

Looking around the room of 150+ business owners I was not alone in my quest for knowledge on Venture Capital, Angel Investments, and the process to achieve the perfect win-win outcome. Finding capital for any startup is essential for your company to launch and grow. Experts predict that lack of cash closes half of all startups within 5 years. I would suggest it is overspending that kills your business. Find the critical aspects that keep your business afloat and pinch your pennies.

Investing is the least understood topic when talking “business.” Unless of course you live in Silicon Valley where million dollar investments are passed around like peanuts at the bar. For the rest of us it’s a mystery, and our first experience is often across the table negotiating terms of an investment. Here are 5 points that I left with from Basil Peters topic.

  • Investments are just as much about the business owner as the possibilities their business presents. Angel Investors seek owners who are charismatic, enthusiastic, and passionate. The business will get you in the door, your personality will sign the cheque.
  • For the investment to make cents for the investor (yes cents) your business should have 10x return potential. 80% of all returns will come from 10% of the investments. Without 10x return to cover the failed investments that are expected your investor will be less likely to risk their money. This may not seem fair, but consider your business. If you have a retail shop your markup on products include theft, or damaged products. Investors are simply playing the numbers.
  • Most large companies like Yahoo, or Google are constantly on the look out for 20 million dollar purchases. Their growth depends on it, and their shareholders demand it. Unlike small businesses, cash reserves are a liability that generate little interest.
  • Popular news headlines include 100+ million dollar deals weekly; this is exceptionally rare. The majority of purchases are under 15 million dollars with the odd exemption being sold for more then 100 million.

The last point describes the truth about available capital for entrepreneurs seeking investment. 20 years ago it would cost millions of dollars to launch your business. Without the internet you would have to create custom software, produce ad campaigns and spend millions on marketing.

Todays entrepreneurs can bootstrap companies for as little as 10,000. The news outlets are accurate when describing the decrease in available capital yet forget to point out the reduced cost for startups. Angel Investors, and Venture Capitalists are constantly looking for new opportunities.

Leap of the Week:
Find an angel investor in your community and be clear about your opportunity. The best advice Peters gave: Utilize all personal financial avenues prior to finding professional investors.

For more information on Basil Peters:   Twitter |   Blog |   Book |   Website