There are times when an investor has made a reasoned bet on an entrepreneur and their business but their confidence level is now at a point that they’ve concluded an investment of £X,XXX,XXX will not in all likelihood return £Y,YYY,YYY, in their desired timeframe. This is a rational determination but you, as the entrepreneur are now dealing with the emotional and psychological issues of the person managing his or her portfolio of investments.
They have private and maybe institutional investors, partners in a fund, employees, spouses, children’s school fees, private bankers and mortgage companies, philanthropic foundations and the gardener’s welfare, who depend on their judgement. The richer the investor is, the more they are a prisoner of their own wealth, and the “welfare system” that rides on their success. Downward social mobility, or the whiff of it, has a chilling impact on investor sentiment in times like these.
There are both “internal factors” (within the entrepreneur’s control and influence e.g. distribution, marketing, production) and “external factors” (outside the entrepreneur’s control and influence e.g. competition, interest rates, inflation etc.), at play.
Right now, EVERY entrepreneur in a growth business dependent on growth capital, needs Investor Plans A, B and C (investor names, structures, combinations of cash, debt and equity, and compelling propositions). What are yours? Don’t have them, you are living on very thin ice. Why take the risk?