Business Angels can spot your opportunities
Oct 22 2008 Article sponsored by Advantage West Midlands
The financial news over the last few weeks, to say nothing about the last few days, has been worse than riding the Corkscrew at Alton Towers on a full stomach.
As dire as the markets are, this is also the time to recognise opportunities.
The severe lack of available credit and the reduced number of investors means less competition for the best deals at the best price. To quote Warren Buffett: “Bad news is an investor’s friend, it lets you buy a slice of the future at a marked down price”, or, more succinctly: “if you wait for the robins the spring will be over”.
This explains why Central England Business Angels investors are bullish right now, and new investors are enquiring about entering the market.
What’s in it for the Angels? Why choose this high risk investment route when everything is in such turmoil?
The profile of an Angel hasn’t changed, though the degree of risk has. In general, an Angel now prefers to see some trading history, and who can blame them, but there are still good early stage opportunities out there.
An Angel recognises the strategic value they can offer an emerging company, generally enjoys the involvement with new bright sparks building their first enterprise, and shares the risk and reward of growing a new business.
Business Angels can receive a lucrative Enterprise Investment Scheme tax benefit making investment into small to medium high growth emerging companies very attractive. SMEs desperately need the investment and support of Angels more than ever in this current economic climate.
Right now Angels could be the ONLY source of money for emerging companies.
What should an Angel look for in making an investment into the SME market? Because these are emerging companies few will have a fully developed management team, projections will be aggressive, sales plans underdeveloped, and in general, these companies should not be compared to seasoned opportunities. The Angel should focus on the ability of the management team to build the business.
The Entrepreneurs MUST demonstrate a reasonable approach to growing their companies if they want to attract an Angel. Contrary to the fear mongering from every news source, Angels ARE investing right now. CEBA will review every business plan submitted and assess it for investor readiness and ability to generate interest from Angels.
Pat Geraghty and David Clark
Other finance initiatives supported by AWM can be viewed at http://www.advantagewm.co.uk/what-we-do/helping-business/finance-for-business.aspx
