A guest post by Venturefest North East Director, Simon Green.
Some businesses can get their new ideas to market without external funding. They may have their own resources to bring to bear or they may have an idea that generates revenue straightaway. Most ideas though need some external funding to overcome the hurdles common to commercialising new products and services.
External funding may come with baggage, in the form of reduced control over the business, increased administrative burden or the costs of interest payments, dividends or a share of sale proceeds. It can also bring benefits in terms of access to the funder’s networks, public validation of your idea and input from knowledgeable investors who have seen other businesses undertake similar journeys.
For ambitious, growing businesses I think that the benefits of bringing in external investors are underestimated. Often such businesses don’t have all the networks they need to succeed and can’t afford to buy in expensive non-executive directors and advisors. Partnering with the right external investor can not only help financially but also in terms of accessing this expertise.
The key word here is partnership. The lovely people at the BBC would love you to think that real world business investment follows the confrontational Dragons’ Den style. I’ve seen plenty of organisations over the years trying to replicate this approach and plenty of businesses who see getting money from investors as a game where there is only one winner. This is a mistake.
Investors are not in their line of work to sit on their money. Whatever type of investor they are, from angels to banks to venture capitalists, their job is to give out money to as many successful businesses as possible. They only make a profit if their money is invested in a business that takes it and creates value from it. Once they’ve made an investment, they want the business to grow and succeed so that they can get some money back. If you’ve partnered with the right investor, they will be on your side, even if it doesn’t always feel like that when they are asking you difficult questions!
Therefore, if you’re trying to raise money for your business, try to think about ensuring you are talking to the right partners, not just the easiest source of cash. In the long run, the investor’s connections, interest in your business and desire to work with you on helping your business succeed may be more important than the money they invest.
At Venturefest North East, we don’t take a Dragons’ Den approach. We focus on identifying the right investors for businesses and working to spark these partnering relationships. Our method works; last year 17 of the 51 businesses we worked with were offered investment at Venturefest. This year, we will again be pairing around 50 businesses with a range of investors from the region and from elsewhere in the country.
If you are looking for investment for your business, speak to us first about how we can help. You can apply (for free) now to meet investors at Venturefest by going to www.venturefestnortheast.com.
Venturefest North East is supported by Innovate UK, the Knowledge Transfer Network and North East LEP, along with around 20 local innovation organisations. Taking place on 13th October, it will include keynote talks from successful innovators, in-depth workshops, a showcase of innovative regional businesses and plenty of networking opportunities.