WHAT IS A POTENTIAL HIGH GROWTH COMPANY?

Companies seeking Business Angel funding will usually be early stage businesses, or established companies seeking funding to develop new markets, and/or new products or services. Less often, will be a start-up company formed to exploit an individual's business idea, although there are funding sources specialising in that area

Is your company well placed to seek Business Angel funding?

Does your company have –

•  a vision for the future and a reasoned argument for growth over the next 3 or 4 years; (a completed business plan is not necessary, VCL will help to develop a convincing information memorandum);

•  an opportunity for new funds, of £50,000 or more, to create wealth, eg investing in plant and equipment or by funding necessary, and relevant, working capital? It should be demonstrable that growth will result directly from the funds invested

•  a strong management team with a relevant track record, likely to empathise with a Business Angel? People are key to an investor's decision

•  demonstrable management commitment of time and resources in the business?

•  a proven product or service for which there is a demonstrable need?

•  a market position, uniqueness of product or service – a competitive edge?

•  some substance to the business eg some sales, premises, raw material sources?

•  EIS suitability? VCL can advise

•  a credible exit strategy in 3 or 4 years' time?

A Potential High Growth company will not necessarily have all these attributes, but is likely to have most

Owners of companies seeking Business Angel funding, have to accept –

•  Business Angels will want a high potential return, to balance the perceived risk – and an investor will almost certainly perceive the risk to be greater than does the management!

•  Equity dilution: new investors will require a significant stake in the business – and the size of their shareholdings will depend upon the degree of risk; the amount of money being committed; and the projected exit value

•  investors will look for an exit in 3 or 4 years – and generally expect management to exit their investment at the same time