Business investment industry blog

No doubts, it’s not so easy to identify and contact angel investors. The most adoptable way to find an investor is to confer with your professional advisors (bankers, lawyers, accountants). They might know those people who want to make investments into a business, also they can give you the professional help with your business plan.
Another way to identify angel investors is to communicate with people you know, trying to find the right person among them.
Also you may try to find angels while using electronic networks. Each networking firm has a database of entrepreneurs and investors that are included to it by paying a subscription fee. Using this database you can find a professional placement agent, but he can be rather expensive. In any way, before choosing a placement agent, try to check all his funded deals and to ask the references from people he has arranged funding for.
While looking for an angel you must take into account your chemistry to him, for your relationships will be the indicator of the success in the business.
Angel investors posses different programs that they bring to their investments. That’s why your needs and your angel’s programs must suit each other.
There are different types of angel investors: enthusiast angels, corporate angels, entrepreneurial angels, professional angels. We’ll try to give brief description of each of these types:

Enthusiast angels simply enjoy to be involved in some affairs. Most of these angels are rather wealthy when they start another business. As a rule they don’t want to participate in management of the company and are not so afraid  to start another business if the affairs are not so perfect.


Corporate angels are as a rule retired executives who are looking for a job. It can be taken into account that their contacts and expertise can give rather valuable input to the business.


Entrepreneurial angels are people who already own rather successful business. Using their outgoing sources of income they can be rather risky and invest big capital.


Professional angels are doctors, accountants, lawyers. Such type of investors offer a product or service with which they are rather experienced.

While searching for angels you have to get to know some information about them, e.x.: What is their background? What part of their involvement will it be? What is their time frame for exit? What are their financial expectations? What are their goals?
No doubts that the right investor will help to improve your business and move it to another level. Be careful while looking for a candidate as the wrong angel investor can be the end of your dream!

Before you’re going to make the investment in any franchise, you have to search the franchisor’s disclosure document, which is called, as a rule, a Franchise Offering Circular. You have to possess this very document 9-10 working days before you’ll sign the contract or pay money to the franchisor. To understand the key moments of the disclosure document follow the points of the outline given below.

1.    Search the background of the franchisor, its prior business, which is identified in the disclosure document. To invest your money with the unexperienced franchisor is surely riskier than to cooperate with the experienced partner.

2.    Require the disclosure of the litigation which might have occurred with the franchisor earlier. The disclosure document can show you any fraud, unfair of franchise law or any other misconduct. The list of claims against the franchisor can show the non-compliance of its agreements, dissatisfaction of the franchisees with the franchisor’s actions. But in this very case you must be aware that some franchisors try to avoid the litigation history by taking away their individual name in the disclosure document.

3.    Assess the franchisor’s financial stability, that must be shown in the disclosure document, determine whether the company is financially stable to fulfill the support it has promised.

4.    Analyze the costs that are involved to begin the franchises of the company, which may be non-refundable. You have to be aware of the potential costs you can possess as a franchisee, ex. payments to the national and local advertising funds, insurance, training, health insurance, legal fees, financial advice, etc.

5.    Determine in the disclosure document what restrictions the franchisor gives you, in some cases these restrictions can limit you to conduct your own business.

6.    Look through the franchisor’s training and assistance program in the disclosure document. Ask the following questions the franchisor:
-    What is the term of the training?
-    What qualifications are given after training courses?
-    Who can help you if some problems appear?
-    Can your franchised outlet be provided with more individual assistance?

7.    Search the advertising costs provided in the disclosure document. Assess what franchisor’s advertising conditions benefit you.

8.    Find in the disclosure document the important information about franchisees. If there’s a great number of franchisees in your region, it may call great competition. Pay attention that a great amount of cancelled, terminated franchises can indicate some problems. Before buying an existing business, indicate the number of&nb ...

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To buy a franchise as to make any other investment is a risky business. Before choosing a franchise, it’s obviously to take into account the need for the products or services, their competition, the background of the franchisor. You have to analyze the need for the product of the franchisor in your region, the seasonality of the product, its profitability, whether this product will be needed in the future or whether the demand for it is temporary. Also you have to determine the level of competition of the product in your region, how many product markets the franchisor purchases in your area, what companies are busy with selling or offering the same products or services with the same or lower price. You have to be able to conduct your business even if the franchisor goes out of it. Will you be able to operate your business alone if you have to suspend workers  from employment to cut costs?Before buying a franchise, determine the name of the company, its registered trademark, the term the franchisor has been in work, the reputation of the company.A great number of franchisors perfectly conduct their own business for many years, but it doesn’t matter, however, that the experienced employer will be able to manage a franchise system. So, before buying a franchise, determine the term the franchisor has managed the franchise system. If franchisors have little experience there is no guarantee that their guidance, training and support will be reliable. Take to attention that the companies that grow quickly may not be able to support their franchisees with the services they promised. So, determine the financial base of the franchisor and its staff, that must be on the level enough to support the franchisees.

No doubts, every owner of his business may desire to improve his financial status by selling the part of it. This operation is called equity financing. After selling the part of your business you automatically give up the control of the company.
This arrangement can be called a partnership when the person who buys part of  the business, purchases a share in it. This person can be called a full partner. Also the person owns the determined percentage of the business if it’s incorporated.
Often before starting such relationships it’s important to check the financial background of the investor in order to avoid any financial problems. You may collaborate with investment banks and agents. However, you’ll be obliged to pay the bank rather substantial fee for finding the investor.
To pursue equity financing is a risky business and you have to decide for yourself whether to pay the fee in order to provide yourself with the security of finding the right match of the business.
To determine the fair price of the business it’s necessary to use justifiable accounting methods. The valuation must be conducted by a neutral account for the investor’s and your confidence.
Equity financing can’t be compared with the merger, for in a merger the whole business is sold, while equity financing just involves the partners to sell their ownerships in the business.