A short podcast-style YouTube video (speaker: George Foley) offering practical advice on raising capital for growing businesses. The speaker warns about angel investors who can meddle despite good intentions; recommends online debt/crowdfunding platforms (e.g., Funding Circle) for sums up to ~£500,000 as a relatively cheap, quick option; discusses private equity/venture capital as expensive (high fees, equity dilution, and controls) but useful for larger (>~£1M) needs and follow-on support; and contrasts bank overdrafts (only for working capital) with term loans (preferred if repayable). The speaker’s view: generally avoid angels, use private equity only when the benefits justify the cost, and prefer debt solutions when feasible.
Chapters
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.
