Raising Finance

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Choosing a funding partner – the CEO’s view

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Finance can be hard to come by in a financially risk-averse world. In spite of Lord Young’s recent assertion that ‘it has never been easier to start a new business than it is today’ growing a business requires access to finance and choice of funding partner who understands your business and with whom you want to work.

Private equity houses and Venture Capital Trusts, such as Mobeus with whom we work, have increased their presence in the UK market, supporting young businesses while banks continue to batten down the hatches.

It was recently reported that invoice discounting as a means of alternative funding has increased 16 per cent year-on-year as companies struggle to acquire necessary finance. In such an environment, it is understandable that leaders of start-ups often jump at the first financing opportunity that presents itself – this can be a costly mistake. 

You must choose the right investor rather than the one offering the first, or a seemingly attractive, deal. It is important to make sure the cultural fit between your team and your financial backers is as good as the deal on the table. They will be in your boardroom for the most crucial years of your growth.   

A good investor not only gives you perspective on your company strategy but should also encourage you to take a step back and delegate tasks to others. This can often be difficult. As you watch your vision grow into a success, the temptation to micromanage can be overwhelming.

However, if you try to remain at the centre of every decision, you will soon be overworked, stressed and start making poor choices. Businesses that are growing rapidly need direction – leaders must be willing to stand at the helm, oversee and direct.   

Patience is essential, as is constantly improving the service you offer – trying to expand too quickly can often lead to a frustrated, overstretched team and often burnout and failure.   

Originality is vital. Taking a foothold within a market by creating a necessary, unique offering can be extremely lucrative in ensuring both the success and longevity of an SME. SMEs should adopt a culture of staying close to both their industry and customers. The senior team must be passionate about their field and ensure that innovation, however exciting, does not come at the cost of seeming detached from the industry in which they operate. 

Whilst there is, of course, no way to guarantee commercial success, with the right investor, a niche of your own and real desire to integrate with the sector you serve, your chances will undoubtedly increase.

Anne Somers is CEO of ATG Media

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