Editor's view: Show me the money

No matter what sector, size or direction, businesses all need one thing: money - and usually lots of it. But many start-ups are missing a trick when comes to finding that all-important dough.

Probably the biggest hurdle facing would-be entrepreneurs is finding the money to launch and support a company during its fledgling months and years.

But for a large number of companies the process starts and ends with the bank manager. Many entrepreneurs - especially those from ethnic minority backgrounds - have trouble persuading traditional sources of finance to part with their precious cash.

So why not look elsewhere?

Private investor network Envestors calculates that there are at least 19 separate sources of funding for businesses. And increasingly, the moneymen are coming out of their shells to embrace entrepreneurs with sound ideas and solid business plans.

Envestors director Oliver Woolley comments: "Now is a crucial time for many entrepreneurs, who are looking to take advantage of the improving economic climate to start-up or grow a business, but require external funding to do so.

"There are many reasons why SMEs are facing difficulties raising finance, but there is much they can do to improve their chances.

"With more new measures due to be introduced to help rectify the situation, such as the government's Enterprise Capital Funds which are to be piloted later in the year, the problem is not lack of choice."

A recent poll of prominent people in the venture capital industry by Envestors, Imperial College Business School and Cranfield School of Management hinted that, in general, entrepreneurs must learn more about the different types of early-stage funding.

Sources of seed capital like business angels, specialist seed funds, grants, awards and the Small Firm's Loan Guarantee Scheme are little known, but often provide the best opportunities for SMEs.

"Entrepreneurs need to get to grips with the myriad of options open to them if they are to ensure they choose the most appropriate type or types of finance for their business needs," says Woolley.

"Once they have identified this they could save time, effort and money by doing some further research to find out who is investing the amount they need in their particular sector, so they take a targeted, rather than a scatter-gun, approach. "

Businesses that keep their eyes peeled and their ears to the ground will also have noticed the growing popularity of specialist venture capital events, in which promising businesses are matched with financiers, in a process akin to 'speed dating'.

One such event is planned for May 11 in London and is being organised by Beer & Parnters, the UK's biggest business angel network with more than 750 members.

Thirty businesses have been invited to attend and will be encouraged to flirt outrageously with money-laden suitors. Attendees are drawn from across the economic spectrum and most will be after funding of between £100,000 and £2 million.

According to Beer & Partners, few deals are completed on the day, but businesses that make a good show of themselves can set the ball rolling and usually guarantee follow up meetings with prospective partners.

David Beer, chairman of Beer & Partners, said: "This is a no pressure, informal gathering and generally regarded as the most enjoyable environment in which to weigh-up a large number of investment opportunities in one hit."

Another example took place on March 25, in the form of the seventh Springboard event for hi-tech firms, where companies looking for a total of £6 million courted moneymen from around the UK.

The event was hosted by Connect Scotland and this year 10 rising technology stars were mixed and matched to prominent members of the investment community.

"Although the climate remains challenging, we are seeing more deals being done. There is growing evidence of increased demand for funding from technology companies and a larger appetite among investors to strike deals," said Andrew McNair, a director at Connect Scotland.

"To help sustain and stimulate further confidence in the marketplace, we are reinforcing our commitment to the start-up sector by having a record three Springboards this year, in addition to our investment conference in October."

It just goes to show that the money is available, and that investors are throwing off their economic downturn-induced shyness to embrace businesses that promise growth and prosperity.

It's out there; you just need to know where to look.