Business Investors are either individuals or businesses who invest in new or growing businesses and business plans. Apart from investing their money, these investors often also choose to contribute their own skills, experience and contacts to the business in order to increase the probability that the business may be successful.
Although a business investors may seldom have a connection with the company prior to investment, they often have experience of its industry or sector. Once involved in the business, the investor will be fully committed to seeing the business through to success. If you consider your self in this role, you may find it obvious that if you invest in a business, you will do what ever it takes to make sure you not only get your investment back but also see an increase in the amount invested.
The majority of Business Investors make investments for financial reasons. However, there are also other motives for investment, for example, taking an active part in the entrepreneurial process, and the enjoyment from being part of the success of a good investment and the sense of putting something back in.
Business Investors are an important but still under-utilised source of money for new and growing businesses. A typical Business Investor makes one or two investments in a three-year period, either individually or by linking up with others to form a Group of Investors. Some Business Investors invest more frequently.
Will the Business Investor be right for your business?
As with all relationships, it is important that you meet with potential investors first. Investors are also just people, and the relationship between you and your investor first and foremost needs to work.
Typically, Business Investors invest between R100,000 and R10 000 000 in an investment. Where larger amounts are invested in a business, this may be as part of a Group of Investors organised through personal contacts or a Business Investors Network.
Business Investors invest across most industry sectors and stages of business development, but especially in early- and expansion-stage businesses. Most prefer to invest in companies within reach of where they live or work. Investors in technology companies tend to be more prepared to travel longer distances.
What do Business Investors look for?
The methods used by Business Investors to decide which businesses to invest in varies greatly, however, the following issues are all taken into consideration:
- The expertise and track record of the founders and management
- The businesses competitive edge or unique selling point
- The characteristics and growth potential of the market
- Compatibility between the management, business proposal and the business Investor's skills and investment preferences
- The financial commitment of the entrepreneur
What to look for in Business Investors?
The company must also ensure that the business Investor is willing to invest in them is right for their company. Before signing an agreement the business must ensure that:
- The management team and the business Investor are compatible and will be able to work together.
- Business Investor’s skills match the companies needs
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What is the next step in seeking Business Investors?
The best place to find a South African Business Investor in through Investors Network. I suggest you join our community and find the best one for yourself, this will most probably be judged on their location, business Investors tend to invest locally, or their specialisations.
