An introduction to investment and the investor mindset

Navigating the world of investment can be difficult at any stage of your business. Writing after his Catch the Wave session for Brighton Chamber, with Nicky Craddock of Cow Corner, Mark Crowter of Galloways shares their introduction and insights into the investor mindset.

What are investors looking for?

To be your partner

This can be one of the biggest personal development challenges if you’ve spent years being the sole decision maker. Before you start looking for an investor, you need to get comfortable having a genuine partner.

Investors need to see that you’re comfortable being open and honest with them. See them as a critical relationship in the development of 

the business, rather than just a source of capital.

Understand your story, aims and goals

To form that genuine partnership, investors need to understand why you’re doing what you’re doing, where you’ve come from and where you want to get to.

Alignment of values and goals is everything. Be brave. Be honest. Be open.

Sector and market focus

Individual investors and investment directors will have different backgrounds, and different understanding of sectors. When meeting investors, be confident that they understand the dynamics of your market. 

You don’t need to be an expert in investment

We get a lot of questions about the technical terms around investment. This is usually because business owners want to speak the same language as investors. 

My honest advice is don’t try. 

Any investor worth their salt should talk in terms you understand (see above about relationship building!) Focus on speaking the language of your business. Investors will spend time listening to you and shared language will follow as you learn from one another.

Key lessons we’ve learned

Investment works

Bringing someone new into your business can be a really challenging step, but we’ve both seen time and time again that, done well, investment works.

We’ve seen people realise dreams of early retirement; a complete change in role from a 70-hour a week CEO to a 1-day a week Chairman; or to strap booster rockets to their business. 

Whilst the outcomes have been completely different, in each case, the honesty over long term plans were there at the point of investment.

Ego is worth zero

Only once have I seen an investment go really badly. In that case, both the investor and the business owner had huge egos. 

Communication was poor; there was clearly a large amount of ‘head-in-the-sand’ over central business issues; and over the next 4 years it crippled the business. 

Talking openly about the issues that need attention, as well as the things that we’re proud of, builds a much more robust, saleable business.

Some technical bits

Valuations

There are a huge range of ways to value a business. Ultimately, you and the investor will reach a point where you’re both happy you’ve found the right spot. 

If you find an investor you get on well with, have shared goals, and can achieve your outcome quicker – or deliver more value – the amount of cash you’re taking off the table now is much less important.

Your options and how to explore them

There are a whole host of investors out there. Get out and network. Someone will know someone who knows someone, so the more ‘someones’ you know, the more likely you are to find the right partner.

As well as bankers and accountants, there are a whole host of business investor groups which are prime for a good LinkedIn stalk. See if you have any shared connections who could introduce you.

EIS / SEIS

There are a range of tax reliefs available for investors who back eligible businesses – potentially up to 50% of any investment can be used to offset taxable income. This may be a real sweetener to attract them. 

Find Mark’s full blog on the Chamber website here.

Galloways are sponsors of Brighton Chamber’s Catch the Wave business support programme. To find out what support is available for your business, head over to the Chamber’s Business support page.

And stay up to date with the latest Brighton Chamber events by signing up to our mailing list.

Finding funding for your business

There are plenty of free resources that can also help you to find grant funding for your business. 

Access Invest4 grant funding through the Business Hothouse

Delivered by the University of Chichester, the Business Hothouse offers free, hands-on business support and access to the Invest4 match-fund grant. Read their guide to getting up to £170,000 to help your business or idea grow here. 

Find your funding with GRANTfinder

The Business & IP Centre Brighton and Hove offers support to businesses through workshops, events, information databases and one-to-one support. Their free-to-access GRANTfinder database is a comprehensive one-stop-shop for most publicly available funding in the UK. Find out what you can do with it here.