A single-speaker YouTube segment advising entrepreneurs on funding choices. The speaker cautions against angel investors who can interfere operationally, recommends online debt/crowdfunding platforms up to ~£500k as a cheap and quick source, warns that private equity/venture capital is expensive (high fees and control) but useful for larger raises, and suggests bank term loans as a middle-ground if repayable. The speaker favors avoiding angels and using private equity only when its cost is justified.
I think the first one would be to be quite careful about angel investors. There seems to be too many people in the world who have made a bunch of money, want to help out but actually get in the way because they bring their own ideas and they sit in your office. So angel investors are quite difficult and actually manage. So the next one is when I was fundraising first time around, we couldn't do crowdfunding. But now you've got a whole lot of stuff like funding circle and of other online platforms which are doing really good, really deep debt. So kind of up to half a million pounds that I think is probably the best way because it's the cheapest way to get money. It's quite quick and as long as you pay your bill at the end of it, no one's going to sort of have an input into what you're doing. And then if you need north million pounds then you get into private equity, straight venture capital that you know by the time you advisor fees, legal fees, I think we spent 150 grand on raising just over a million pounds. So that's expensive. It's got a high rate of interest attached to it and a share allocation and it comes with a whole bunch of controls and some people in your boardroom and ask our progress. Okay, so private equity and they have reasonably contacts and the money and they'll support you in the second round or third round if the business is going well. But it's the most expensive. I guess in the middle there is kind of bank debt and overdraft. The other trap I fell into once was to use the overdraft to grow the company. Well that's not. Overdrafts use working capital. So you know money's coming late, you should always be back to zero at the end of the month with your bank account. But a term loan from a bank, if you're confident you can repay it, that's also a really good answer because the bank, the fact that you'll be paying, they'll be interested in your strategy of course but they won't be there every month. So they'll let you run the company, which is great. I think as entrepreneurs we all just want to kind of be left to get on with our ideas and our strategies. So yeah, so you've got the whole game. I personally stay away a bit from angels and I would only use private equity if I really thought it worth the cost fundamentally. And it's worked out okay for us. Yeah, all these things haven't done everything we wanted. But equally we couldn't have grown and done the investment we needed without the money, so. And it was the solution at that level when we needed it. So that was a good, good ide.
