Situation: A small company seeks outside investment to support its growth. The company’s industry is dominated by large, well-recognized players. These companies have historically been the company’s customers; however, they have a quarterly mindset, and are increasingly looking to support their own development groups. How do you attract investment to a small company?

Advice from the CEOs:

• What is the company’s ROI and risk profile?
  • Positive ROI, particularly taking advantage of new distribution channels.
  • ROI turnaround is typically 1-2 years.
  • There are about 50 similar companies in the market.
  • The company possesses intellectual property that makes it appealing.
  • Project maturity is generally considered a risk in the industry – it is not as experienced or mature as other industries.
  • An additional risk is that new developments in online distribution are continually changing the industry environment in unpredictable ways.
• Investigate and approach companies in other industries with similar structures – dominated by large players but with a healthy presence of smaller companies. Examples include the movie industry and real estate pools.
  • Talk to investors who are familiar with these industries to see whether they would be interested in investing in the company’s projects.
• There is a good deal of money out there looking to beat the current returns available through the stock market and paper investments. Look for an angel investor.
• Given the Risk/Reward structure of the industry, approaching professional investors may be the best bet for the company.

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