Historical Routes to Finding Investors in the UK
The last global financial crash was over 10 years ago and the shockwaves affected many businesses in the UK. Subsequently, banks became more reluctant to lend money. Confidence in them dropped after closures and the following low interest rates on offer. Many banks have been systematically closing branches meaning a decade of minimal returns for savers.
As a result, the UK property market took a tumble but has slowly crept back up. It is still seen as the safest kind of investment but has minimal short term returns. The world economy is facing challenges of tradewars and globalisation fears. On top of this, the Brexit conundrum is making many uncertain about the financial future of the UK in the global market.
Because of these reasons, many are now turning to investing in high growth UK businesses. They offer a higher yield and faster return on investments. However, becoming a stakeholder is a risky business! The growth of new startup business in the UK averages at 12% each year but roughly the same amount fold. So unless a brand new venture is outstanding in more ways than one, most financiers will still look towards companies with a proven track record. A safer bet is boosting sales of the low cost products with a mass market appeal. Items that have become standard parts of life are less volatile, though making a big return on these is very rare.
The internet is still seen as an innovative way to repackage and redefine long standing products and ecommerce is a growing market, as more and more consumers shop online. We find investors are still very much interested in this market area. Although having a new idea, to generate increased revenue and make something old more exciting, takes a lot of ingenuity.
Finding Investors UK Using Media Hype
Market trends tend to follow the media, or is it the other way around?! We read reports on climate change so we change our buying to lower our carbon footprint. We read about a new health concern and how to prevent or cure, and buying patterns head in that direction. We read about the latest computer gadget that everyone else is buying so our interest in it grows… and the list goes on. Finding investors in this realm is still a challenge, as the media can also effect a negative change in mainstream attitudes. Which quickly have a disastrous outcome! Therefore, joining in with a new fad needs to be in line with wider public perceptions. Investors are always looking ahead with eyes wide open to possible dangers.
The most talked about topics often have a solution already in the market-place. As such, startup investors are really looking for virgin ideas that are not yet in the media. Finding investors in this area of entrepreneurship is very challenging. Requiring you to take a leap with imagination and also find a way to back it up. This is where research of potential plusses and minuses is imperative. Also, having a lot of resilience is vital because you are very likely to get a lot of rejection!
So you have to decide upon your niche. Whether it be a new idea, product or method, or a way to increase saleability of a current venture. Then there are more hoops to go through before you can approach and find investors. First port of call is always friends and family. Better the devil you know as they say – reaching out for support from those who value you is a good start. Amounts are usually small but it does give you something to springboard from.
The Campaign Strategy to Find Investors in the UK
Having a unique selling proposition is imperative to making your business idea marketable and find investors. You need to be specific and not try a broad appeal to many markets. This actually weakens the core strength of an idea and dilutes the allure. Persuading an investor you have a marketable business venture takes more than you might think and we, at Drop Studio, will give you all the advice you need on how to approach potential investors and all the tools you need to run a successful fundraising campaign.
Your pitch is more than just your idea. It is a way to sell yourself and this is what investors want. Personality is like a magnet and often an idea can inspire more backers if they like you. So, at Drop Studio, we will help you understand how to market yourself – the founder, too. Enthusiasm for your idea is necessary but you don’t need to be over dramatic either! It can be a fine line between seriousness and clowning around. Too boring and the investor can be asleep before they’ve finished reading your idea, but being too wacky can put a lot off too.
Like a bank, an investor will expect to see a business plan. This is easier for an ongoing business with profit forecasts based on historical trading facts. As opposed to predictions made on ‘what if’ scenarios. Your plan needs to have an executive summary or overview of objectives, with the following areas covered: products and services; market opportunities; sales and marketing; competitive analysis; operations and management team.
Taking the Bait
You need to think about the returns you can offer as an incentive. Investors need a strong return value to make investing worth their while. This can be equity and shares in the business, ownership of assets and buildings, or rewards of products or services. You need to have a clear focus on how your business is going to make money. A desire to sell your business in the future is actually seen as good business acumen. Finding investors is not just about the here and now but where you see your business in 5 years. Sale of a company that is growing is sensible business, so don’t feel obliged to hang on to your idea. You won’t be looked down upon for being a realist and often the biggest returns are made by selling on.
Setting your funding target too high can also have a detrimental effect and impede finding investors in the UK. Whilst we all want to aim for the highest amount possible, reaching a lower target and going into overfunding works like the latest fad. More people will want to get in on the act if its doing really well. Conversely, setting your target too low can make people suspicious!
How to Find Investors in the UK
So now you have done all this, you want to target as many potential backers as possible to find investors. At Drop Studio, an extra string to our bow is the database we have compiled to save you lots of time and effort. We have put together a list of current high growth UK business investors. These are all mentors already with investments. We segregate into your particular area to ensure they are firstly, interested, and secondly, approachable. Our GDPR compliant list of investors in the UK covers more personal details than just names and contact details. Comprehensive and extensive, with information about the size of their investment portfolio and amounts already invested. We have managed to obtain about 50% of LinkedIn profiles to solicit the advance. Again, saving you time.