Are you considering raising investment for your business development and growth in exchange for shares, or perhaps you are a ‘high net worth’ individual willing to consider investment in new or developing enterprises?
Whichever side of the financial fence you belong, B2B Cashflow Solutions may be able to help.
Through our own client base, and those of our professional partners, we have access to individuals, syndicates, and companies which will consider investment in high growth businesses.
In addition to money, our Equity Investors often make their own skills, experience and contacts available to the business in which they are investing.
Typically, private and business investors invest between £10,000 and £750,000 however larger investments are not uncommon.
Investment can be sourced across most industry sectors and stages of business development, but especially in ‘new-start’, and ‘early-growth’ businesses.
What attracts Investors?
- The expertise and track record of the founders and management
- The competitive edge or unique selling point (USP) of the business
- The characteristics and growth potential of the market sector
- Compatibility between the management, the business proposal, and the investors skills and investment preferences
- The financial commitment of the key management in the business
However, before you take the next step you will have to ensure that your organisation has a lawyer, an advisor and a comprehensive business plan.
What to look for when seeking an Equity Investor?
It is important to ensure from the outset that the potential Equity Investor considering the investment is right for your specific business. Therefore, before signing an agreement the business should consider if:
- The management team and Equity Investor are compatible and able to work together for mutual benefit
- The Equity Investor skills match the business needs
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What should you consider before becoming an Equity Investor?
- It is highly recommended that you get legal advice for assessing documentation, structuring the deal and drawing up agreements.
- If you are new to Equity Investing, it is worthwhile obtaining help from an accountant or corporate financier experienced in assessing business plans and conducting due diligence, as well as providing tax advice on the Enterprise Investment Scheme (EIS).
- You should also discuss certification either as a High Net Worth or Sophisticated Investor, as defined by the Financial Services Authority (FSA) under the Financial Services and Markets Act 2000 (FSMA).
- Plan how you intend to achieve a return on your investment, for example from dividends, fees and capital gains.
- Find out about the entrepreneur and management team’s background and track record.
- Establish whether the entrepreneur, fellow directors or any of the management team have been bankrupt or been a director of an insolvent company.
- Consider investing alongside an experienced Equity Investor. We may be able to put you in touch with an experienced people or organisations, with whom you can invest.
- Be patient. It takes more time than many Equity Investors anticipate to find the right investment.
- Never invest without understanding your ‘exit strategy’.
Can you get Tax Relief as an Investor?
The Enterprise Investment Scheme (EIS) can be valuable to those who find an investment. For an investment over £500 in eligible shares, tax relief is given at 20% up to a maximum investment of £400,000 in any tax year, for those individuals and companies eligible for EIS.
EIS investments are exempt from capital gains tax if held for three years. In addition it is possible to defer payment of tax on an existing capital gain by setting it against an EIS investment.
EIS is very complex and you are strongly advised to seek help from a tax expert.