FIRMS considering angel or venture capital investment should always think very carefully about the long-term implications for their business and what changes there might be as a result.
That was the key message from Sir Tom Hunter to a caller on the Go Radio Business Show with Hunter & Haughey yesterday.
“Whenever people are taking on investment, I get them to pause and ask them what are they giving up by taking on outside capital,” he said.
“Money comes with strings attached and there is no way people can take money into their business and things won’t change.
"The investor is doing it for a return in a prescribed piece of time so all the awkward questions have to be dealt with upfront.
"You need to ask yourself 'why am I taking up this investment and what am I giving up to do it'.”
Meanwhile, Lord Haughey highlighted the importance of getting the calculations right, saying: “If you are convinced that by having some outside capital that you can grow the business and it is going to add value, then don’t look at it as if you are giving away a percentage of your business – always look at what the cash and the bottom line is.”
Returning to the “emotional” part of having an outsider coming into your business, Sir Tom said it was important to consider how that might change the culture of a company.
He said: “How much of a say will they want, will they change the culture – will they add something to the business, will they interfere?
"It could be really good or it could be really bad.”
On the positive side, he suggested that having a “critical friend with business experience” could be beneficial for the long-term future of the business.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here