27.11.2009 21:56:53

Investors Network Team

I've been involved with a number o f businesses and finally I've found the the recipe for success when investing in start-ups

Veteran entrepreneur and now business angel shares his experience on getting his kicks from investing in new businesses.

For me, there's nothing like it--the excitement of seeing a business rise up from nothing. I can't even explain the feeling. There's just something unbelievably thrilling about seeing the growth, watching the numbers go up, getting the business to stand on its own. I've done it myself a number of times, and I can't get enough of it.

And now I'm having the same experience with David's business. I'm seeing it all unfold through his eyes. I see the same spirit, the same perseverance. I know exactly how he feels, coming home at night, not being able to sleep, thinking, "Oh my God, 145 meals! I broke a record!" You can't wait to go back and set another one. It's incredible. It's the greatest feeling in the world.

It's also one of the greatest payoffs you can get as an investor, or so I've realized. Yes, making money is important. I wouldn't go into a deal unless I thought I could get my capital back and earn a good return. But I really don't do this type of investing for the money anymore. I'm more interested in helping people get started in business. Whatever I make is a bonus on top of the fun I have being part of it and the satisfaction I get from helping people like David succeed.

I wish only that I'd figured out how to play this game sooner. It's taken me 25 years and a lot of bad deals to get it right. Not that there weren't opportunities to make money along the way, but somehow they got screwed up. Even when I did make some money, I seldom felt good about it, and I never had much fun. Something always came along to spoil the experience.

In the process, however, I developed a few rules of angel investing, which I've finally been able to bring together in one deal. They may not be right for everyone, but at least they've allowed me to find what I've been looking for all these years.

 

Rule 1 ?Invest in people who want your help, not your money

If I'm going to invest in a new venture, I want to play a role in its success. I come in as a partner, and I expect to be treated like one. Not that I want to run the business or make the key decisions, but I like my opinions to be heard. That means investing in someone who wants to listen. The problem is, people always come across as good listeners when they're asking you for money. So I prefer to give my financial support to those who don't expect it.

 

business angels | Angel Finance | business investors | business investment | angel investors

18.09.2009 19:02:17

Investors Network Team

Recent research in the UK suggests that Angel investors will be key to economic recovery. In the UK, as in South Africa, entrepreneurship and small business forms an important part of the national economy. Angel investors play an important role here when it comes to business finance. With banks around the globe being much more choosy when it comes to investing in businesses, entrepreneurs and small firms increasingly opt for alternative finance from angel investors.

The report reads: 

business angels | Angel Finance | business investors | business investment | angel investors

16.09.2009 13:57:51

botes

Being involved with entrepreneurs and business investorsbusiness investors on a regular basis now for almost a decade, it’s clear that although the financial and business landscape changes constantly, Investors needs don’t. Speak to most of the angel investors, micro finance providers, venture capital firms and entrepreneurs who have taken part in successful negotiations for gaining business investment or providing the same they will all tell you the same thing. When meeting with potential investors, if you are an entrepreneur who wants to walk away with a positive agreement you will need to have done or produce at least the following three things.

Market research
Market research at a very basic level will tell you if those who you think will be your clients are interested in your product or service. Irrelevant of how exited you are about your business idea and how many of your friends and family have shared your excitement with sympathetic nod and grin, if you have not spoken to potential clients who have said they will be happy to part with their hard earned cash for your new product, the simple fact is that you simply don’t know.
What is that you want to know at this stage?
Are your potential clients interested in your product?
How much will they be prepared to pay?
What about the product appeals to them?
Where will they look for your product or buy it?
Where do they currently look for similar products?

Investors will be interested in the information you have produced during this process. If they are new to your industry then positive responses here is what will give them confidence.

Know your numbers
The numbers behind your business is what investors are listening for while you are talking about your dreams and vision for the business. Costs are important. Will you be able to cover your costs to start with? How will the production costs – if it’s a manufacturing business and staff costs and other overheads when it’s a service based business effect the eventual price of your product and more importantly will there be enough leverage there to allow for a healthy profit. Investors are listening for information to tell them that the money they are putting in will be coming back with interest. The higher the risk you are asking them to take the more attractive the return will need to be.

Business evaluation
The final bit of information that they will be looking for is the valuation of your business. If they are asked to part with their cash for a stake in your business then what is the size of the stake that you are giving away. Be realistic with your valuation. For a new business the valuation can be based on the potential indicated by the market research, information on competitors and that they have created, other issues such as pre-orders generated, patents and the size of the market. Once ht business has been trading it will be much easier to value it as trading figures, assets and actual amount of clients can be used. When it comes to evaluation this can be used to negotiate with investors but going in with to high an evaluation to start with may loose you any chance of a deal to start with.

With banks becoming more risk averse in recent times, business investors have become a much more attractive option for many entrepreneurs. If you are an entrepreneur looking for business investment, make sure you have done your homework by the time you get to speak to investors.

angel investors | business investment | business investors

04.08.2009 11:11:40

botes

Venture Capital firms still looking to investment opportunities said Julia Fourie, CEO of Mark Shuttleworth’s venture capital company Here Be Dragons (HBD), based in Cape Town. In a conversation with Cape Business News where the differences with Venture Capital market in the US were discussed Julia said “The biggest similarity is in that the actual performance of the underlying companies is not as good as anticipated as a result of the tough economy. This is likely to result in longer holding periods before selling the companies, in order to deliver the returns required.”

“Where South Africa differs from the US is in that we have a less stable venture capital market, so the number of venture capital players is not expected to diminish in the next year. There are many new entrants that have mostly unused funds that they are still looking to invest.”

“Coupled with this, the crisis in the economy is not as severe in SA. Our banking industry has protected us to some extent and government has also stimulated the economy with new construction projects,” she says.

“The nature of venture capital is to invest in early-stage, rapidly-growing businesses – assisting them to grow and become more profitable – with a view to selling the investment to another partner within a three to five year period,” says Fourie.

In further positive news, she made it clear that Venture firms are very much still looking to invest in the business opportunities with strong business plans and potential locally. She commented that “Locally, we expect to see venture capital companies continuing to invest in the year ahead, as funds are available and the slow economy presents a window of opportunity to acquire companies at good value.”

HBD is looking to make at least one more investment of between R10 million and R25 million in local, early-stage businesses this year. The focus will be companies with innovative ideas with the potential to expand internationally.

“If we can partner with quality companies through tough times, there should be substantial rewards to be reaped in later years.”

“As HBD takes a three to five year outlook on the business potential of an investment, we not only focus on this year’s problems but also next year’s opportunities,” says Fourie.

venture capital | investment | business investment

03.08.2009 21:22:14

Investors Network Team

24.07.2009 19:10:43

botes

Many see business innovation as key to not only the overcome the current economic slowdown but also to ensure the future of South Africa's businesses in an increasing competitive gloabl market place. I was glad to read that the Department of Science and Technology (DST) has increased funding for its innovation and research projects and says it will continue to increase spending over the next four years. This is great news for South African based ventures and we look forward to see these plans being carried through.

 

The story featured on IT Web this month carries  on to say the following:

The Department of Science and Technology (DST) has increased funding for its innovation and research projects and says it will continue to increase spending over the next four years.

In its medium-term expenditure estimates for 2009/10, the department says it will spend R4 234 111. This is a R37 051 increase from the 2008/09 budget estimates. The department's research, development and innovation programme, which is key in developing new areas of focus for local research and innovation, received R1 142 883.

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The human capital and knowledge systems programme, which develops and implements national programmes to help develop the skills base, got the biggest boost with R1 598 038. Socio-economic partnership programmes, which promote strategic partnerships within government and industry, were allocated R1 190 653.

The DST says the budget increases were due to substantial additional allocations for projects in the research, development and innovation programme, human capital development initiatives and increases in funding organisations. In its budget vote, the DST emphasised the importance of its 10-year innovation plan; commercialisation of research; regional and international cooperation; research and development and infrastructure development.

The DST will spend R3 821 112 on science and technology services, education and training and technological innovation. While funding for public institutions has dropped from 2008/9 estimates, the DST says it will increase again in 2010/11. The department has seven institutions reporting to it, including the National Advisory Council on Innovation, the National Research Foundation and the Council for Scientific and Industrial Research.

Innovation push

The DST says increases in its research, development and innovation programme are due to additional allocations for research programmes and the introduction of the Square Kilometre Array (SKA) project. The department also emphasised its commitment to ensuring SA wins the bid to host the SKA project by constructing the demonstration telescope MeerKAT by 2012.

Increased expenditure is also due to implementing the 10-year innovation plan and includes an additional R80 million allocated to the Innovation Planning and Instruments sub-programme. Spending in the space science programme also grew significantly and will continue to rise to R688 million in 2011/12 to fund the establishment of the National Space Agency.

The department says it will continue to promote technology commercialisation through the establishment of the Technology Innovation Agency, centres of competence, the National Intellectual Property Management Office and the South African National Space Agency. The successful commercialisation of the Joule electric car was also named as one of the department's key objectives.

Knowledge boost

Allocations for the human capital and knowledge programme grew at an average annual rate of 11.6% over the medium term. The DST says this is driven by additional funding of R50 million for postgraduate bursaries and R150 million to the National Research Foundation for the research chair initiative.

The programme will continue to build human capital for research, development and innovation by developing an innovation-enabling skills strategy – which the DST hopes will be approved by Cabinet by September.

The DST says it will also increase the number of researchers and the rate of knowledge production by placing 210 research chairs in the national system of innovation by 2010/11, and producing 3 000 science, engineering and technology PhDs a year by 2018.

Innovation Investment | business investment

24.07.2009 18:53:47

botes

The South African Department of Science and Technology recently indicated that ot will be providing further support for South Africa's Bio Technology ventures. This will come as great news for businesses in the Bio Tech industry looking for funding and knowledge support during start-up and growth.

 A recent article reported that:

Science and technology minister Naledi Pandor says SA has recognised the importance of a successful biotechnology industry and many structures have been established across the country to enhance research and innovation. “This is a sector that we have to build and grow. We want to make SA one of the top 10 nations in the world by 2018.”

The integration of the regional biotechnology innovation centres into the recently established Technology Innovation Agency (TIA) would improve government efforts, she adds. CapeBiotech, BioPAD, LIFElab and PlantBio are the innovation centres, which have migrated to the TIA.

The TIA has been established as a public funding agency tasked with converting local research and development into commercial products and services. The agency, which is chaired by Mamphele Ramphele, is tasked with stimulating the development of technology-based enterprises, developing a technology base for the local economy and facilitating the development of skills for innovation.

Pandor notes that the heavy burden of disease in southern Africa created the need for added investment in biotechnology solutions.

“The development of research and innovation platforms and programmes will facilitate rapid drug discovery, drug design and development, and advances we hope will help us produce radical and affordable treatments and cures,” says the minister.

The DST remains committed to realising objectives set out in its National Biotechnology Strategy and 10-year innovation plan to promote innovation through the funding, support and commercialisation, she adds.

“Although the development of a sustainable and vibrant biotechnology industry remains a complex task, and although the global biotechnology environment is highly competitive, we are confident that SA will be successful.”

Business support | business investment | Bio Tech