Investment & the Non-Executive Director / Non-Exec Chairman 18 March, 2008
Posted by Simon Webber in AIM, Board Member, Chairman, Corporate Finance, Corporate Governance, NED, NEDs, Non-Executive Directors, PLUS, Simon Webber, VC, Venture Capital, Venture Capitalist, business angel, companies act, development, finance, float, fund raising, governance, growing company, growth company, idsquared, investment, investor, leadership, nec, non-exec, non-execs, non-executive, non-executive director, non-executive director recruitment, nxd, placement, private equity, recruitment, register, small business, small company, unquoted, vc-backed.trackback
IDsquared will find a non-executive Board member for growth businesses who are looking for Venture Capital (VC), Private Equity or Business Angel investment. Sometimes this is before the company embarks on their fund-raising; in which case it is usually at the request of the business or their Corporate Finance advisor. Sometimes it is when an investment takes place; often this is at the request of a Venture Capital investor.
IDsquared’s Directors each have a background in small company investment, venture capital and growth businesses. The following are our thoughts on the roles that a Non-Executive Director (NED) or Non-Exec Chairman (NEC) can play in the investment process.
The Early Stages
The most important thing about looking for investment is careful planning. It’s essential to get the following things right at a very early stage:
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How much funding you need
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What is needed from an investor (skills, experience, contacts)
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What is on offer to the investor (valuation)
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What growth is going to be forecast
Getting these wrong will put off even the most interested investor. The right Non-Executive Director will help a business to plan their fund raising strategically from the very beginning. They will also ensure that the search for investment does not get all the attention to the detriment of the running of the business.
Making the Approach
Once the offer to investors is (carefully) planned, the approach must be made. This is another area where experience is incredibly valuable. You only get one chance to so make the most of it. the right non-exec will almost certainly have raised investment before and may well want to put themselves in the role of investor for a few dummy presentations - it’s time very well spent.
Larger Investment
If the business needs more funding than one investor will put in, it may well pay to appoint appropriate corporate finance specialists. If they recommend a wider fund raising then they may well also recommend appointing a Non-Executive Director, or more likely Chairman, with relevant experience. This may be a pre-IPO funding round, a float on AIM, PLUS (formerly OFEX) or even a main market listing. An NED will need to know their way around the City and must be able to hold their own with major investors.
Venture Capital
You can search our blog for various articles which discuss the role of the Non-Executive Director and Non-Exec Chairman in Venture Capital-backed businesses. You may also want to see our pages for Venture Capital clients.
If you would like to join our Non-Executive Director register then please read our pages for NEDs.
If you would like to see a shortlist of appropriate non-executive Board members then please give us a call or drop us an e-mail so that we can understand what stage you are at.
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