Investing in start-up businesses can be an attractive proposition for many, especially considering the tax reliefs that might be available. That said, investments should only be made after careful consideration of the opportunity including the people behind the business.
Investors should look for a team who have created a valuable proposition which meets a real need within a market and is capable of being scaled quickly.
The people are key to its success whether they be the ones with the idea or the ones who have the skills and experience to take it to market and grow the business.
Some investors follow their heart rather than their head in backing ideas that they believe in but which don’t necessarily stack up financially, either because the idea might be very expensive to launch or the appetite in the marketplace is muted. This is fine if you can afford to walk away if the business fails or you have sufficient resources to continue to back the team if the cash burns more quickly or for longer than expected.
A balanced team is vital to the success of any project – a good mix of skills relevant to the needs of the business, e.g. technical, marketing and finance to name just three. If you have the right team, it is important to keep them engaged by ensuring they retain sufficient equity in the business such that both you as investor and them as a founder and/or management team can share the vision and remain motivated to deliver success.
For more information about how DSG can help you and your potential investee businesses contact a member of our team today.