News & Views

Finding the right investment partner for you

by Alex Duffy
Insights
|
6th December 2017
Finding the right investment partner for you, post image

You might think if there was a negative correlation between the UK’s decision to leave the EU and growth/ investment in the UK economy that someone forget to inform the creative and tech sectors.

From January to June 2017, the tech sector saw a total global investment into the UK of £1.3billion. That’s a four time increase from 2013 (footnote 1) and at a higher level in a six-month period than any other time in the last ten years.

Combine this with the fact that in 2015 the creative industry was responsible for 10% of the UK’s exports, creating three million jobs and worth an estimated £87.4bn a year to our economy (footnote 2). It becomes clear where the opportunities are created and delivered.

The amalgamation of the creative and tech sectors has been a long time in the making but with this growing collective industry comes innovative ways of designing, marketing and selling products. Along with an understanding of data analytics collected as a result, investors want to be involved.

The question arises if you are seeking capital, what should you be looking for in a funding partner?

New funds and investment groups are on the rise. Often these groups want to be involved from the very start, offering seed funding to be the key capital provider as the business grows.

If this is the start of a long-term relationship, it has to be the right one.

Navigating the labyrinth of finding the right funding partner can be complicated. There are the clearly aligned interests of having the business succeed and hit certain benchmarks; but what those benchmarks are and how the shareholders are compensated or penalised is difficult to steer.

I’ve often had discussions with the funder and the client company where, it seems, both parties were in different meetings. A problem that could have been solved with a few questions raised at the start:

Goals of your company: these were agreed but the processes to get there was not discussed, leaving a void. Although the minute details won’t be discussed at the start, they will as situations arise resulting in possible friction. If it’s important to you, raise it at the very beginning.

Understand the goals and values of the investor: do they come from a similar background? Are they sympathetic to the situation you find yourself in – whether it be capital needed to grow organically or to acquire.

Quite simply, as with all relationships, it’s reciprocal; both parties want success and to see a positive outcome that ensures synergy, financial success and a positive outcome. Finding the right investor can ultimately be a long and complicated procedure but doing it correctly will have a positive impact on every aspect of your business for years to come.

By Alex Duffy

Associate

 

Footnote 1 – As stated in the London and Partners website.

Footnote 2 – Government Statistics 

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