Loans or Investment for Technology Businesses

Loans or Investment for Technology Businesses

“We’re short of money, let’s get a loan or investment.” This is the sort of thinking that leads businesses to a dark place. The reality is that the funding of technology businesses, like most other businesses, requires a bit of work.

Here’s my checklist. If you can genuinely say you’ve achieved or got all of these in place you are probably a safe bet for the bank or investor…probably.

Investor Checklist

Strong Team and Culture

People buy people first, even banks and investors. Have you got a strong management team? Do you have succession planning in place? Is the culture right, do the team all gave an owner mindset?


Do you have distinctiveness in your market? Do you have IP with a value? Is your business model different from your competition? Investors rarely get excited about getting involved with a ‘me too’ cheap price business. If everything you do is easily replicable it’s will be of low interest to investors.

A Sound Need for the Money

Cash to sort the quarterly rent or the monthly payroll will rarely get the type of investment you want. Banks and investors want to understand how you will use the money, how it will be invested or used for growth. Sometimes this might be pivoting the business or changing the business model. Whatever the need, a sound plan (words and numbers) will be needed.

Management Information

Businesses that have good, accurate and regular management information is what investors, lenders and banks are looking for. Can you provide management information quickly? Businesses that can close their books, accurately, within seven days of month-end are proven to be safer investments.

Strong Client Base

Is more than a fifth of your business coming from one customer? What would happen if that customer stopped buying for 6 months? It is important to ensure that you are not over-reliant on one or two large customers. Investors will see that as fragility in your business however secure you think your client relationship is. You can sometimes use price to mitigate, see the Akio Morita example.

The Ability to Adapt

Is your business flexible? If there’s a downturn, can you reign back on costs quickly? Can you change direction? In periods of growth, can your business rapidly scale whilst maintaining margins.

The Ability to Repay

Can you repay the loan or provide a positive ROI to the investor? Wherever you get your funding from, they will want to know you can fulfill the agreement you make.

Seth Godin’s comments on money and investment

“Money costs money.

“Because there’s a cost to using it on one thing instead of another.

“And because the person who invests money has choices, and often chooses the choice that works best for them.

“Most people would be happy with a hotel that generates a profit of a thousand dollars a day. But if the hotel cost $50,000,000 to build, you’re bust.

“Time costs money too.

“That’s not the same as saying “time is money,” which it isn’t. Time is magnificent, hard to stockpile and impossible to recover.

“But it still costs. Which means that it’s worth considering whether something worthwhile comes back for your investment and your effort.”


Akio Morita Put The Price Up for Bigger Orders

When a US retailer asked Akio Morita to quote prices for a Sony product, a radio, he gave a higher price for a bigger quantity. This sounds counter-intuitive but Akio Morita explained that if he wanted to deliver more products with a short lead time, he would need to hire more people, get more plant etc. Following this deal, if there were no repeat orders, he would lose a lot of money on operating expenditure.

I am a partner at Succession Plus. We are specialists in providing proactive, focused and strategic advice for SME owners to help them manage strategic Business Succession and Exit Planning.I am enjoying a career that has embraced product and service businesses at all stages of their journey. I have worked in technology, telecoms, consumer electronics, payments, media, and publishing.

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