Advantages of Hedge Fund financing:
- distant £ (like dumb £)
- equal partners
- no time line constraints (like VC has a 5 year term and has to close the pot etc.)
- better terms than VC
- less interference
- 1) institution investment (part of the big fund), 2) proprietary investment (the hedge funds OWN money to invest) and 3) high net worth individuals – so 3 chances of investment from the one firm.
You must make clear when you approach them that you are NOT a VC cast-off.
Ways to find a hedge fund:
Start off at your corporate finance boutique and ask them where they get their money from – and see if any of them say hedge funds – if they do, hey presto – get the names.
Go the the Hedge Fund and ask them – hey, you investing?? If they say no – then do you know who?
Amount of $:
If the hedge fund is leading, this is likely to be a minimum of £4M – if they are following, then this could go down to £2M.
If you mention AIM, then your VC’s start to offer better deals as they don’t want to lose you.
VC’s are running scared of Hedge Funds butting into their sector of the market.
However, if you go with AIM, it’s hard to change the direction of your business in the eyes of your shareholders and public – where if you were with a hedge fund, one call and you can sell them on your new direction