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

14.09.2009 20:57:46

Investors Network Team

Finding business finance for your business can be straight forward if you know your way around the business finance landscape. You have come up with a great business idea, have done your market research and feasibility study, you have a great business plan and you may even have already put together a management team to get your idea of the ground. Its time to find finance for your, currently small, business.

Finding finance for a new business really can be a mine field. Yes there may be plenty of sources of finance, even you might not be aware of it yet, but the trick really is to find the finance that is right for you and your business.

Most businesses will start at the bank. This process will normally be easier if you already have a list of clients willing to buy, or who have bought your product or service. High street banks will be e very weary of financing equity,  but if you need a certain amount of trade finance, they will see you through. Or it may be that you have certain assets that the bank may lend against.

If a bank is not an option what next?

It depends how much money you are looking to raise. If it is over R1m, there are a number of financial institutions which may be able to help. Typically, they will not invest amounts of less than R1/2m because the amount of work they will have to do to make the investment makes it uneconomical. If it costs them R100,000 to make the investment and R20,000 a year to monitor the investment at the end of five years the investment has cost them the amount invested plus R200,000. A R100,000 investment will therefore need to treble just to break even for them!

business angels | finance for a new business | small business finance

04.07.2009 21:18:09

Investors Network Team

The term "Business Angel Investor" refers to those individuals who back new entrepreneurial ventures with promising business plans.  They are the largest source of real risk capital in the country and the least understood.  In fact, outside the major financial centers, they are often the only source of risk capital for the entrepreneur.

Business Angel investors are wealthy individuals, often former or current entrepreneurs, who help finance startups in exchange for equity. Although less well-known than venture capital, Business Business Angels invest more in total than VC firms do. The resources available to find Business Business Angels in South Africa include organisations such as the Investors Network industry associations and venture capital seminars. However, the best resources are often your attorney or banker.

The term "Business Angel" was first used in the USA on Broadway to flatter wealthy people who invested in theatrical productions. These days it extends to private investors in businesses that have outgrown credit cards and loans from friends and family as a source of new capital but are still too small to attract professional venture capital.

The informal Business Angel market plugs a gap caused by the very success of professionals. The total amount of money managed by venture-capital funds has grown dramatically in recent years, yet it takes as much time to properly research a small investment as it does a larger one. As a result, the average investment of a venture fund has likewise grown to the level where many venture firms won't even look at a business that needs less than R10 million, even though many ultimately successful high-tech businesses start out at this scale.

The biggest trend in the Business Angel world is the creation of formal networks. Business Angel investing has historically been a costly, hit-or-miss affair, with personal connections and introductions being the primary way that investors and entrepreneurs match up.

Business Business Angels are wealthy individuals who will write you a personal check, ranging anywhere from R20,000 to R1 million, to help finance your company. There are many flavors of Business Business Angels, from the retired dentist hoping to impress his golfing buddies by getting in on the seed round of the next eBay to the former CEO who wants to stay in the game (if not up until 2 a.m.) by helping startups grow.

At some point you likely will raise money from a large venture capital firm, but it won't be the first financing you receive. Most VC firms today won't make investments less than R10 million to R15 million. Yet virtually every Net company needs to raise a seed round of a few hundred thousand Rands to allow the founders to quit their day jobs, create the skeleton of the company, incorporate, build a prototype Website, file for necessary patents, and so on. Taking less initially lets you build the value of your company and lets you give less of it to the big VC fund when you eventually raise that R50 million round.

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