Investor networks are increasingly common in the funding market, with many UK networks now established to help investors find opportunities. These networks also bring numerous investors together in one place.
One of the struggles many businesses face when seeking investment is finding someone who fits your vision and wants to support you. Investor networks can overcome this by offering entrepreneurs the chance to present their idea to multiple parties at once, to uncover at least one interested person.
Asides from this, there are plenty of other benefits in utilising investor networks. In this guide, we explain what an investor network is, how they work and why they could be significant in helping you to achieve funding for your venture.
What is an investor network?
Simply put, an investor network is a community of people who are all looking for suitable opportunities to place their money in viable businesses. It works similarly to any other business network, but everyone included will be looking to invest. The concept is most commonly associated with angel investors (high net worth individuals looking to support entrepreneurs and businesses), but it can encompass different investment types.
In the modern age, many digital networks have been set up to bring investors together and help them identify their options. Well-known examples include the Investor Network, Angel Investment Network, Envestor and Finstock Capital.
As already mentioned, these networks bring investors together, using their shared interests. It is possible to get networks exclusive to a specific industry or location, which streamlines the enterprises eligible for funding. There may also be networks tied to other shared interests, such as impact investment and female networks to support women-led businesses.
Many of these networks offer services that match businesses to investors within the community. Entrepreneurs will be able to submit a high-level pitch of their idea, often online, which investors can view. In this sense, it’s a win-win for everyone: businesses are put in touch with potential funding sources, while investors have a host of ideas they can look through to find one that suits them. This can lead to long-term relationships between the two sides if a deal is struck.
What are the benefits of investor networks?
Opening up opportunity
Undeniably, the most significant advantage of investor networks is that they present enhanced opportunity for businesses. One of the toughest challenges when trying to launch or scale a company is getting in touch with potential investors. In some cases, this can lead to hours spent networking and still getting no result.
Due to these networks’ scope, businesses who present an idea within them immediately have access to large numbers of potential backers. This saves time on having to network and pitch to investors one-on-one, especially when you consider the likelihood that not every one of those people will be interested.
In location or industry-specific networks, companies are better aligned with backers’ interests, increasing the chances of engagement and success upon presenting their ideas
Using networks enables companies to capture engaged leads for funding in a much more time-efficient way whilst still driving results. Submitting information about your business is often simple, with you required to upload a short pitch about your business online or via other means.
As well as the possibilities for entrepreneurs via networks, there are also vast benefits for investors themselves. Using the networks can uncover a multitude of investment opportunities that fit in within their interests and provide good opportunities for their money.
This saves investors time. Rather than having to sift through countless pitches, they can instead have business proposals presented to them – often through a digital platform – to review in their own time. From there, they can decide which appeal to them and progress the conversation towards a deal that works for both sides.
Sharing data and contacts
An additional factor within investment networks is leaders’ ability to share data and build mutually beneficial connections across the community.
This is particularly important for impact investment, giving individuals the chance to gain a complete picture of the funding market. By sharing data, funders can see where inequalities lie and address the issue through their funding strategies.
It also means that investors can share opportunities. If a business idea is particularly promising, it may be the case that several people look to invest – which could mean increased capital for businesses to achieve their goals.
Alongside the funding potential, sharing contacts across networks could establish valuable relationships between investors and entrepreneurs. This could create future investment possibilities and help build supply chains, partnerships, and other professional connections.
Finally, investment networks are usually credible sources of funding. Individuals will need to meet specific criteria before they can join a network. As such, the network will be reliable, and businesses can be confident of the legitimacy when approaching them. This will also enable entrepreneurs to find eligible, trustworthy financial supporters.
For businesses seeking to present to networks, they will often be required to submit a standard set of information. This will assist investors in their due diligence investigations before they commit to financing any venture.
The shared credibility between investors and businesses within the networks sets strong foundations as the investment process begins, leading to fruitful partnerships between both sides.
Investment networks present many advantages to enterprises and the funding market as a whole. As such, investors and businesses should consider the possibilities in joining a network or considering one as part of its funding mix, with the potential of substantial financial gain for all parties.
However, as with any other type of investment, approaching a network requires forward-thinking and readiness. Those within the network will need to be convinced of your business’s value, even in a concise proposal, and will likely follow up with critical questions if they are interested. So, you need to be prepared to answer their queries and highlight the worth of your venture.
If you need help in getting investment-ready, we can help. We work with SMEs at all stages of development to create effective business plans, pitches and proposals, all to secure the funding you need to achieve your ambitions.
We can also put you in touch with relevant investors and networks to kickstart your financial journey.
Get in touch today to find out more.