Guide

Secure equity investment

Find the right private equity investor

The main sources of private equity are:

  • venture capitalists (also known as private equity firms) - who are likely to provide finance of between £250,000 and £2 million at all investment stages - see venture capital
  • business angels - who tend to fund start-ups and early-stage businesses with smaller investments of between £10,000 and £500,000 - see business angels

For further information see six sources of equity finance.

Find out what private equity investors are looking for

You will need to find out what potential investors are looking for, so that you only approach people who are looking for businesses like yours. For example, you should make sure that you approach investors who would be interested in investing:

  • at the stage your business' development is at
  • in your sector
  • the amount of finance you are looking for
  • in your region

The British Private Equity & Venture Capital Association (BVCA) Directory of Members provides information about private equity firms' investment preferences.

If you are looking for private equity investment, you should also find out about the investor's own funding cycle. Private equity firms raise their own funds, invest them, and reap the profits over a period of between five to eight years.

It's useful to find out when your potential investor raised their last fund, how big it was and how many investments they have made. Have they already invested in businesses that you could usefully collaborate with? Or have they invested in your competitors?

Also, private equity firms usually finance new businesses early in their funding cycle, allowing time for the businesses to grow and return a profit on the investment. Towards the end of their funding cycle, private equity investors are more likely to invest in mature companies that are likely to offer quick financial returns.

Your business should look for investors that can offer useful knowledge, experience and relationships, as well as capital funding.