How to find an investor in the UK

How to find an investor in Great Britain? - legal analysis

Attracting the right investors is a critical step for start-ups and companies looking to expand in the competitive UK market. Although the process can be difficult, with the right resources and strategies, it becomes achievable.

We'll cover the basics of investing and fundraising, including different types of investors, such as business angels and venture capitalists, as well as different types of investments, such as equity and convertible bonds.

Overview of highlights

Basic tools to start working with investors:

• Online platforms: Equity crowdfunding: Seedrs, Crowdcube, StartEngine; P2P debt lending: Funding Circle, Zopa, RateSetter, Lending Works; Reward-based platforms: GoFundMe, Indiegogo, Kickstarter; Charitable donations: JustGiving, GoFundMe, Localgiving
• Networks and platforms for investors: Angel Investors Network for finding business angels; London Venture Capital Network for venture capitalists; British Private Equity and Venture Capital Association (BVCA) for private equity firms
• Other Resources: Family Offices for HNWI and Family Welfare; Government grants and funds, such as UK Startup Loans, as well as tax credits and grants, including EIS, SEIS and R&D tax credit; CityFALCON's UK Private Equity Analytics: a powerful investor and company data tool that allows you to find suitable investors by industry, funding stage and terms.

Categories of investors

1. Business angels are investors who provide capital to early-stage startups in exchange for a stake in the company. These are usually successful entrepreneurs, experienced professionals or wealthy investors who invest their own funds, hoping for a profit if the startup succeeds.

They play an important role in the startup ecosystem, not only providing funding but also providing mentorship, expertise and networking opportunities. Business angels often invest at the seed or early stages, when traditional sources of financing, such as banks or venture capital companies, are not yet available.

2. Venture capitalists (VCs) are professional investors who manage funds raised from institutional investors such as pension funds, endowments and high net worth individuals. They specialize in investing in fast-growing startups and early-stage companies.

VCs provide funding at various stages of a startup's growth — from seed rounds to later funding for scaling more established companies. They typically invest significant amounts of capital and participate in multiple rounds of funding. These investors look for startups with high potential for rapid growth, and their return expectations are often 25% to 35% per year. 

Cooperation with venture capitalists requires a clear strategy, a convincing business plan and a long-term vision. Their investment conditions can be more complicated and more profitable for the investor compared to business angels. In addition to financial resources, venture capitalists offer strategic guidance, industry expertise and valuable connections. 

They often sit on the board of directors of the companies they invest in and actively work with the management team to drive growth and realize the company's potential.

3. Private equity (PE) firms differ from venture capitalists and business angels in that they focus on mature companies with stable financial performance. They usually have long-term investment horizons and focus on companies that seek to scale and further develop.

PE investors often take a significant ownership stake, working closely with management to improve operations and increase company value. Their strategies include buybacks, privatization of companies and using a combination of debt and equity financing to implement strategic initiatives.

4. Crowdfunding platforms are online resources that connect entrepreneurs and startups with potential investors and sponsors. They allow project creators to demonstrate their ideas and raise funds from a wide audience without traditional bank loans.

The main types of crowdfunding platforms include:

1. Equity crowdfunding platforms: Raise capital by offering shares to startups. Examples: Seedrs, Crowdcube.
2. Reward-based platforms: Creators offer rewards or benefits in exchange for funding. Examples: GoFundMe, Kickstarter.
3. Debt crowdfunding platforms: Funding through loans between investors and borrowers. Examples: Funding Circle, Zopa.

These platforms offer a convenient way to obtain funding, test concepts and attract supporters.

5. Family offices are private companies that manage finances and investments for wealthy individuals and families. They offer investment management, estate planning, tax, charitable and asset preservation services.

These offices take a long-term approach to investing and can provide significant capital and strategic guidance. Although connecting with family offices can be challenging, they offer valuable advantages for startups and companies seeking patient capital. Several family offices are also launching accelerators to identify investment opportunities.

Current questions - answers

Cooperation with legal marketplace 'Consultant'

Cooperation with the legal marketplace "Consultant" allows you to effectively prepare a business for attracting investors in Great Britain thanks to a comprehensive legal analysis of the situation and audits. Professional legal analysis and auditing, including review of documents and legal structure, helps identify weaknesses, ensure compliance with investor requirements and reduce risks. This ensures transparency and increases investor confidence, which is critical for successful capital raising.

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