Business Angel and Venture Capital Funding
Why Beer and Partners?
Andrew Mitchell, a director of Straight Business Solutions, is also an associate partner with Beer and Partners. Beer is the leading source of venture capital and business angel investment for growing SME businesses in the UK. We are regulated and authorised by the Financial Services Authority (FSA) to carry out the regulated activity of ‘arranging investments’.
Are you a business looking for business angel finance?
A business may be at a very early stage or just looking to expand. Beer reviews over 3,000 business plans from companies wishing to raise business angel finance each year. We take on around 100 of these as clients and have raised £15 million of angel finance each year for these companies for the last ten years or so. We have a very high success rate for finding funds from our 1,600 plus business angels who invest in these types of opportunities, with clients raising typically between £50,000 and £5 million for each company.
What Beer is looking for?
Beer is looking for businesses that can demonstrate a good management team, a sensible and realistic valuation of the business worth and a good commercial business plan demonstrating significant growth prospects. We have a good idea of what appeals to our business angels and try and only take on companies who we feel will have a realistic chance of raising the required finance.
How do we market to investors?
Beer has been marketing companies to investors for a long time and has found that the most effective method is a combination of the rifle, the shotgun and the blunderbuss. So we use three different routes to investors: Personal contact – we know the active investors, their likes and their dislikes well, so we send them our three to four page summary of the business, which we then follow up with a telephone call. We e-mail a 200 word summary to all our investors and to our other contacts who represent investors; circulation is 8,500 and rising. A further 50 word summary goes on our website and is given to all new investors.
How we help you with negotiations?
When raising money, there are pitfalls for the unwary on both sides. We have enormous experience in doing deals and have seen most of the wrinkles that can emerge. Due diligence, though often informal, can be fraught; we know what the investor will need to see so you don’t waste time or money.
How to present to investors?
We will be asking you to present your investment proposal, face to face, to investors. Whether this is one to one or to a whole room of possible investors, it is important that you follow some simple rules. However experienced you are at presentations, investors are different and you need to know the DO’s and DON’Ts. Remember you are not selling your product or service; you are selling your shares. If you need more than 10 minutes to explain your business and the deal, you’ve got it wrong. Aim for 5 minutes in rehearsal (and you must rehearse); on the day that will become 7 to 8 minutes. That’s the optimal timing. If you cannot get both the part of your speech that describes your business AND a description of the investment deal in the time, then cut down the former, not the latter.
What you should prepare?
Any PowerPoint must be relevant and not undermine the main message. Keep these to a minimum. Remember that investors – at least our investors – are not stupid. Far from it. So you are likely to get some pretty searching questions. Of course it is impossible to generalise, but they want to know what’s in it for them and are likely to focus on the following important aspects:
- Management team: What is in their background that shows they are capable of turning the investor’s money into profit?
- Product or service and its market: What is unique or different about this? What about competition and entry barriers and the status of IPR? Have you anything they can see and touch?
- Financials: Where is profit coming from? What’s the margin? What’s your burn rate? What do you need the money for?
- Value of your company: What is it now and what will it be in the future, say, in three years time? Why will their shares increase in value?
- Risk: How can they minimise risk?
So it’s the old mantra, sell the benefits and not the features.
Next steps?
If you think that you need equity finance now or in the future, it is never too early to start the process. Please contact Andrew Mitchell, Associate Partner at Beer and Partners, Grosvenor House, 11 St Paul’s Square, Birmingham B3 1RB, e-mail mitchell@beerandpartners.com or telephone him on 0121 233 0359.
Important Information – Please Read Carefully
This communication has been approved by Beer & Partners as a financial promotion. Beer & Partners is authorised and regulated by the Financial Services Authority. Investment in unquoted business carries high risks as well as the possibility of high rewards and an investor’s capital is at risk in making such investments. It is highly speculative and potential investors should be aware that no established market exists for the trading of shares in private companies. Please note that any tax treatments referred to in financial promotions approved or issued by Beer & Partners will depend on the individual circumstances of the investor. All of Beer & Partners’ fees are payable by the client companies to whom it provides services, investors are treated as retail clients being recipients of Beer & Partners’ financial promotions. Where a promotion contains an overseas element the protection afforded to retail clients in relation to UK investments may not be available to investors. Investors also may not be eligible for protection under compensation schemes which are available to investors in UK financial instruments. The information contained within this communication may not be used for any purpose other than in considering whether you should enter discussion with any business described.