How long does it take to get funds into my account?
Quite a lot of people that are new to raising alternative finance expect the answer to this to be quick; it’s not.
I can understand why many people think like this because the news about raising finance is usually dominated by the successful deals.
Nowadays there are two types of deals. Online and offline.
Firstly, online.
It’s common to see headlines about finance secured in days or even hours through a Crowdfunding website.
What the article won’t tell you is that it can take 3 months to get a proposal loaded up onto a platform.
Loading the information is relatively simple; the hard part is getting all the right information and back-up documentation ready and approved by lawyers or be screened for FCA compliance.
Once all the relevant information is physically loaded yo the website, then the formal placing can begin. But again, this is usually preceded by weeks or months of on and offline campaigning.
The person seeking the funds would be encouraged to contact friends and family and be active on social media to promote their proposal to generate as much interest as possible.
There are also usually a number of investors in the background, waiting for the proposal to appear online and they will generally step in first to pledge their funds. This in turn creates a momentum and a desire that others will follow and pretty soon, if done correctly, the proposal can be funded in a matter of days.
Of course, it has to be a decent proposal and there has to be a decent return offered to investors.
All proposals should follow the CREST model.
The Credibility of the proposal and the people behind it needs to be demonstrated.
The Return offered must be decent.
The Exit needs to be clearly defined.
There should be adequate security in the form of a physical security over land or buildings or a floating charge over the purchasing company or a Deed of Trust or shares and finally, the whole proposal comes together and should feel trustworthy.
Trust is a difficult thing to connect with online but it can be done.
In terms of timing for a non-crowdfunded or offline proposal the timings are different and the perception is that this route takes longer.
It probably feels longer because the initial proposal is just to get notes of interest. Once these are received there is a lot of work to gather in the information in due diligence to satisfy an investor.
It’s also quite common for an investor or two to drop out for many reasons that may not be associated with the proposal.
Although this can feel like a tragedy or a setback it should actually be a stepping stone to accelerate the proposal. Investors that have expressed an interest will ask lots of questions, they will give you an indication of how an investor thinks and when answering them you should keep an FAQ list ready for another investor. It’s often a good idea to post these onto a website or a dropbox account where you can keep all the relevant information.
So to timescales for offline investments; I have seen them take anything from a few weeks to several months and everything in between.
To give you some examples of recent offline deals; £550k asked for in early June, received in July. (4 weeks) £200k asked for in December received end Jan. (8 weeks) £80k asked for in December, received in April. (20 weeks) £100k asked for in March, received in late May. (12 weeks) £450k asked for in July, received in October. (14 weeks)
This and many more subjects will be expanded on in the Raising Angel Finance Course in Peterborough. For more information contact; karlenepartridge@progressiveproperty.co.uk
Ray is a shareholder in www.AngelsDen.com and Property Angels Den where investors are introduced to entrepreneurs or developers seeking finance.
If you have a proposal click here: Application form page: http://www.RaisingAngelFinance.co.uk/investment-application-form.html
If you are interested in becoming an Angel Investor, Click here; www.WestStreetCapital.co.uk or : http://www.becomeanangel.com
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