Raising Finance

Published

Why it’s important to question your investors’ intentions

3 Mins

Investors, like companies, can have a host of motivations. Some investors look for a great, quick return; others believe passionately in the power a company can have in changing an industry, and want to support them.

The struggle to find this second type of investor is especially important for business owners who have founded companies on ethical ideas. The ideal investor will understand the financial risks and allow a business’s culture and values to thrive, even if it isn’t optimum for growth. 

For companies who appeal to customers because they were founded on family values or healthy living, the success of the business could depend on proper maintenance of these values.

Betsy Boo Creations are one-such company. They’re a children’s clothing company from Southport, Merseyside. They were founded at home by mum of two, Sascha Rawlinson, who began knitting children’s clothes and posting the products online. The company’s use of social media, in particular on Facebook, won them 20,000 fans and sales rocketed: they’ve just opened their first bricks and mortar store.

Thanks to their success online and expanding customer base, they’ve attracted the attention of investors. 

While this has been great news, it’s provoked a worry that investors will want to push the growth of the company – at the expense of Betsy Boo’s family-first, which has endeared to them to their loyal fans. “Our customers are spreading the word about us and we work on a return customer percentage of around 80%”, Rawlinson says.

Fast expansion and outsourcing production to large suppliers could break-up the homemade brand they have worked hard to build. “An investor can quite easily endanger the brand of a company, by not empathising with it. Our customers, our loyal ones in particular, need looking after moving forwards if we hope to grow.

“A poor investor who is looking for a quick turnaround would probably not look at these people. [They] would be more interested in expanding the business fast.” 

Her particular fear is spreading themselves too thinly by acting to fast, and diluting the company’s homemade culture. Outsourcing production? It’ll never happen, says Rawlinson. Businesses who expand fast risk this dilution, and entering in bad, alienating habits: sending out emails piled with stock photos or having unengaging support staff, because while money can purchase capital, it cannot safeguard the soul of the company.

How do you find these types of investors? Rawlinson knows expansion requires investment, though she notes they weren’t in hot water beforehand. For Betsy Boo, it’s been a waiting game. “In order to grow significantly, we understand that investment could help us. We are open to looking at it [only] if everything is right for us and for the betterment of Betsy Boo Creations – without damaging what we have built.”

Share this story

How Triumph Motorcycles beat the Japanese at their own game
How to avoid the wrath of a Google penalty
Send this to a friend