Here at NZ Chambers of Commerce Northland we are often approached by incredibly passionate, innovative people wishing to start a business. This business is often the fruition of years of thinking about a particular problem that they believe they can solve to meet an unmet need of the market. As with many businesses their challenge is to move from idea to market as quickly as possible and anyone who has tried to do this will know this is not always an easy thing to do. If we start with the assumption that they do have a good idea and there is a validated market demand for it, then the difficulty will often exist is insufficient capital to transform the idea into a sustainable business proposition.
Overnight business success may take many years to happen. Any business needs sufficient capital to sustain growth and often this investment of capital needs to be able to be sustained over a long period of time before it returns dividends. Funds most likely come from three general sources; banks, friends or family and third party investment. A common form of the third party investment is angel investment. These wealthy individuals – often operating within a group such as ICE Angels or Angel HQ – invest in high-growth, start-up companies. These individuals have often been successful in their own commercial endeavours; they will have a wide range of skills, experiences, and a lifetime of networks and enjoy giving back to the business community.
Because they are investing in your business they will expect you to demonstrate a high level of understanding in your marketplace, competency in business knowledge, sound governance, an understanding of the financial aspects of your business and what your strategic vision is to achieve your aspirations. If they are taking the time to consider investing their money in your venture then they expect you to have taken the time to do the necessary background work in preparing to pitch for their support.
Generally they will be in for the long game and interested in business aspirations that extend beyond the bach, boat and BMW. It is important to remember that these people are investors not bankers and will expect that the people they are investing in have both the business capability and capacity to succeed. Because they are an investor and because they are risking their money they will be expecting a return on that investment.