Investment is a crucial ingredient in all kinds of business ventures. At one stage or another, it’s likely that every business will find itself too big to function without more cash – but this doesn’t tend to happen at the same time as a sufficient growth in revenue. Bridging that gap before self-sustaining revenues arrive is a crucial function of investment – no matter what sector or industry you might be in.
Most often, people associate investment with injections of financial assistance. And it’s certainly true that this is the most usual form of investment: from venture capitalist firms to providers of angel investment, there are lots of options. But business investment can take all sorts of different formats. For some people, it can be a cash injection from family and friends, or it could even be an investment of time and energy. This article will delve into the myriad options.
Financial: the high-profile options
First off, it’s worth looking at the most obvious investment routes. Broadly speaking, these fall into two categories: venture capital firms, and angel investors. Venture capital firms tend to be large in nature, and there are all kinds of staff members you might come across. A VC firm, as they are often known, will be headed by a leadership team, but there will also be growth specialists and other individuals employed to work with your business if you’re successful in applying for funding. Firms in this field are known for taking a large-scale approach to investment: US Venture Partners has 745 investments on the go and has made 292 exits so far!
Angel investors, meanwhile, are people who are more likely to operate as lone rangers rather than on a systematic, almost industrialized basis. This route tends to attract high net worth individuals who are looking to get themselves involved in a project – and they often end up providing more than just cash. They are also often great sources of wisdom and advice and want to be involved in the strategic running of the start-up as well as simply hoping to get a profit out of it at the other end.
For those who find the thought of pitching their idea to a bunch of venture capitalists (or, indeed, entering the networking world to find an angel investor) a little too scary, there are alternatives. The main one is asking friends or family for financial support. The good thing about this, of course, is that there are usually far fewer barriers. While it’s not unheard of, family members are unlikely to subject you to the same degree of rigorous questioning that a venture capitalist might!
But this can backfire. In some cases, it can lead to breakdown in communication between families, and in some it has been attributed to anti-growth recklessness and irresponsibility on the apart of founders. Another downside to these kinds of alternatives, of course, is that you need to know someone that is wealthy in order for it to succeed. Most businesses need substantial injections of cash: after all, the average salary for a web developer in the US is almost $70,000. Most people don’t have family or friend networks in which there is that much spare cash lying around – so it’s not always a viable option.
Time and energy
If people can’t invest financially in a business, they can do other things. Often, time and energy are great ways for people to contribute to a growing firm. Say you’re about to run your first ever direct marketing campaign, and you’ve just received the flyers. A great job for a friend or family member to do would be to fold them for you – on a voluntary basis. Another area in which people can often tap into networks of goodwill is by offering space. Does your dad have a spare garage, for example? That could be the perfect space for you to set up some desks – and the sense of focus it might provide could make all the difference between your firm failing and succeeding.
The word “investment” is often on the lips of many people in the business and start-up worlds. It’s commonly associated with angel investment and venture capitalists – the latter of which invests in Internet businesses alone to the tune of ten billion dollars or more per year! But by thinking outside of the box and attracting other forms of investment, such as financial assistance from family and friends or even just a donation of time to help you get up on your feet, you may well be able to get your business off the ground and help it to grow faster than you thought possible.