Business

Investors' mindset is optimistic

By Reuben Buchanan

The National Australia Bank (NAB) recently released their quarterly survey of business expectations for the next 12 months. It showed that confidence was reading below levels recorded during the 1990s recession and the lowest result since the start of the quarterly survey in 1988.

However a recent survey by Wholesale Investor of their 4,000 + investor database revealed quite the opposite. This presents an opportunity for entrepreneurs who may be seeking capital in 2009.

Here are some of the key points revealed in the survey:

• 96% of investors are optimistic about the current investment environment
• 80% of investors have 50% of more of their funds in cash
• 71% are interested in private opportunities
• Private companies are heavily favoured over public companies, by more than two times (76% private compared to 29% private)
• A further 24% say that now is the best investment environment they have ever seen in their careers
• 33% have $1m or more to invest. Based on the survey database of approximately 4,200, this equates to 1,386 investors, or minimum $1.36 billion in investable funds
• 91% of investors would back an early-stage/start-up business if it was within their preferred sector and had a strong board and management
• The biggest challenge for 55% of investors is finding suitable opportunities.
• 32% of investors surveyed report that their biggest challenge to making investment decisions is that most companies are not investor ready.

Top three sectors sought for investment – from highest to lowest

• Industrial/Engineering — 19%
• Education — 17%
• Green Tech / Clean Tech — 17%

Types of investments sought:

• Direct equity
• Strategic investment through the issue of fresh capital
• Distressed assets
• Opportunistic deals that are significantly undervalued
• Asset purchase
• Acquiring some or all of assets of a business

So what does this mean for anyone seeking capital?

Firstly, if business confidence is down and investor confidence is up, that means now is the right time to be seeking an investor for your opportunity. Most other business owners would not know that the current economic conditions create optimism among the investment community because of the lowering of business valuations.

Sure you might have to give away a bit more equity to get that capital, but there is no time like the present to build your business. Smart companies are recognising that now is the time to build market share and an injection of capital is one of the best ways to do this.

So think big, get out there and meet some investors. Show them your business opportunity and you just might meet the right capital partner.

Also, if you would like to obtain a full copy of the survey results, please contact Steve Torso of Wholesale Investor at s.torso@wholesaleinvestor.com.au

Reuben Buchanan, Director - Wholesale Investor & Teldar Media founded Wealth Creator magazine in 2001. Today he assists and educates companies on capital raising and exit strategies. www.teldar.com.au