Question:
Dear Tran:
I recently came across a
client that is in need of an investor(s). The primary objective of the
business is to provide digital media marketing, business social networking and
information technology services for the Supplier Diversity community. Any
ideas as to how to go about and find these investors?
Answer:
As
an accountant, I get approached a lot to help with formulating business plans
for potential investors. This also includes, introducing the business owners to
new investors, potential investors, long-term investors, and angel investors
(if I can find them).
When
I approach any individual, I like to start within my own circle first -- high
school friends, college classmates, and chamber of commerce. Once I have
identified my initial roaming area, I then classify the "investors"
into "New Investors", "Potential Investors",
"Long-Term Investors", and "Angel Investors".
The
reason for such categorizing -- so I know how to approach and what to approach
them on.
New Investors
--
this is likely to be their first investment and they will range from terribly
reserve/conservative to being very liberal with their investment. They are
likely to care more about the infrastructure of the business and because this
is their only investment right now, they are likely wanting to be a part of the
business on a more active level (weekly financial reports opposed to monthly or
quarterly).
--
I approach these investors according to my profession. I am an accountant and
have an established reputation for careful money management and working on a
tight budget to make a company successful. I also have a reputation for
"not needing a large client. I will make your company into a large
client". Thus, they have confidence that an accountant with such
reputation is going to watch their investment.
Potential Investors
--
These investors already have other investments and are just looking to
diversify their portfolio. They likely won't want an active role in their
investment due to the quantity of their investment. They are also a slightly
older crowd and have their own accountants & financial analyst on reserve
somewhere on their phone.
--
Approaching these investors require more skills, but the payoff is bigger --
more money, more resources, and they're ok with being absent from their
investment. However, they'll definitely want to see you polished up, suit and
tie, and at least a good level of assurance that you're not an "upstart
kid looking for money" as one of them had told me. Approach them as you
would a new investor -- just expect to have all the questions answered, good
responses, and a lot of projections.
Long-Term Investors
-- These investors are normally
older and you will likely be dealing with their accountant(s) than you will
with them. They are old money and have been investing a long time and thus, are
highly experience and can smell a good business plan when they see one.
--
When you approach these type of investors, approach them with significant care.
You are not only presenting to them, but also to their accountant/financial
team. They will bring the idea back to their accountant and relay it, which
means, anything and everything you say have to be extremely clear so not to be
lost in translation. Also, copies of business plans, projections, investment
amount, and so on is your best bet. Finally, if you know a friend or a family
member who knows this type of investor, it is going to be your best approach.
Now
that we have the type of investors out of the way, finding them is not that
difficult. Chamber of Commerce is a great place to meet business owners and
investors. Also, approach your local investor's organization -- there are about
10 big ones in St. Louis and I just did a quick search. Approach friends and
inner circles. Failing all of this, go to a Financial Advisor or Accountant
that you do business with frequently. They are the money handler and will know
who is interested and who isn't.
Anyway,
I hope this all helps!
Tran
Nguyen
Accountant
