Investment banker or private funding source?
When raising money for a start up, what is best way to investigate angel investors and investment bankers who approach the opportunity? What factors should I consider before I make my final decision?
A little known strategy is to use a corporate private investigation company to look into the investor(s) on your behalf. Completely confidential and they can find out all the information you'd need. Depending on where you're located, this company specializes in executive profiling, OSINT (open source investigations / social media) etc. Might be worth checking out: https://www.haywoodhunt.ca/mergers-acquisitions.html
Investment banks help companies or other entities raise funds, and buy or sell their stakes in listed or private companies. They are typically paid a success fee as a % of the money raised or the price paid for an M&A transaction, to which a flat fee is sometimes added. Investment banks can also provide the funds themselves with a view to selling all or part of the debt/equity to third parties in a second stage. If you are looking for more information, go to http://investmentbank.com/mergers-and-acquisitions/
HI Yvonne, please visit www.scaalecapital.com, Im sure they will be able to help you.
The factors to be considered are: the investment portfolio of the angel funding, financial muscle of the angel funder, reach of the angel investor, ability to support the start up in all the possible aspects of business etc.,
Investment bankers won't give you the time of day unless you are ready for an IPO or need at least $20M in funding. They are not going to help you secure $500,00 or even a few million dollars because the fees generated by such a deal wouldn't materially affect the investment bank's bottom line. Instead, focus on these steps:
1. Develop a detailed business plan, including multi-year financial projections.
2. Determine whether you need debt funding or are willing to allow investors to own equity stakes in your business.
3. If you go with debt, add interest payments to your financial forecasts. If you'll sell equity stakes, determine the valuation of your business for use when negotiating with potential investors.
4. Approach traditional banks (if seeking loans) and regional economic development organizations with your plan.
5. Submit your plan to crowdfunding firms. EquityNet is one potential source of funding. Expect a somewhat lengthy funding process.
Let me know if you'd appreciate further guidance on the financials!
I wouldn't use an investment banker to raise your initial round. If you have determined that angel funding is the right next step for your business, getting personal introductions to local angel investors is the best approach. First, research angels in your area. Find ones that are interested in your industry. Once you have come up with a list of angels, find ways to get in front of them. LinkedIn is a great tool to see if you have any mutual connections. You also probably have local events or office hours where you can meet these investors. For example, here in Boston, we have the Venture Cafe where investors hold office hours almost every month. You can sign up for a slot to talk to them. If they cannot help, ask them who they think might be interested in what you are doing. Also, some investor groups offer information sessions. Check out their websites. An example is Golden Seeds (http://www.goldenseeds.com). They hold periodic information sessions where you will get a better sense if you are ready to pitch to them and it's a great way to start developing relationships with the investors. As a female entrepreneur, you should check out Golden Seeds and other organizations that cater to female entrepreneurs. There are a growing number of resources available to female founders. Best of luck.