As a restaurant owner, realizing the full potential of your business takes drive, careful planning, and above all else – money. In addition to small business loans, grants, and various government incentives, one of the most effective methods for securing additional capital is by working with investors.
However, in addition to providing financial resources, investors will also take part in business decisions pertaining to your restaurant – so it’s critical that you don’t just work with whoever can cut the biggest cheque.
If you own a restaurant in Ontario and are searching for potential investors, here’s how you can find the best partnership for you while weeding out those who won’t make a good fit.
Angel Investors in Canada
An “angel investor” is an individual or group of individuals that specialize in investing in start-ups and small businesses – such as restaurants. They typically target promising, fast-growing businesses, contributing both money and other business-related resources in exchange for personal equity.
For restaurant owners in Ontario, there’s no shortage of potential investors to pitch to. It’s estimated that there are currently 20,000 – 50,000 active angel investors in Canada. That being said, not all investors will be a good fit for your restaurant. Before you select an investor to work with, having a strong vetting process is absolutely essential.
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Industry Experience
Finding the right investor for your restaurant is about more than just the money. As they’ll can some control of your business, it’s important to work with someone who has tangible industry experience.
Ideally, their experience and know-how are as relevant as possible to your business model. Restaurants are a fairly common avenue for angel investors, that said, they’re not all the same. When researching a potential investor, it’s important to really zoom in on their experience in the industry and how other restaurants in their portfolio compare to yours. For instance, do they specialize in working with franchises or franchisees? Have they invested in other eateries in your local market?
Understanding what specific insights or knowledge they may be able to offer you will make a big difference in your restaurant’s future.
Understand Their Long Term Goals
Although you’re not surrendering control of your business completely, working with an investor means they’ll have a say in certain critical business decisions. As a result, you’ll want to work with an investor that shares the same long term goals for your restaurant as you.
When talking to potential investors, ensure you have a clear understanding of what they expect from your business and what their long term intentions are. Some angel investors are merely looking to make a quick buck, jumping ship as soon as their returns pay off. If you determine that a potential investor shares a similar vision for your restaurant and will have your interests in mind, they could be a good fit.
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Resources Beyond Capital
As a permanent advisor to your business, an investor can be a huge asset to your future success. However, not all investors will be able to make the same non-financial contributions. With pitching to potential investors, it’s important to discuss what they can offer beyond capital.
From restaurant industry expertise to marketing power, and mentorship, investors can provide invaluable resources for improving your business. As well-connected businesspeople, seasoned investors often have a large network of industry professionals they can leverage to optimize the short and long term operations of your restaurant.
Check References
Speaking to an investor’s references is one of the most effective ways to do your due diligence. Ideally, a potential investor will provide you with high-quality references that share a similar restaurant or business model as yours.
During these conversations, try to get a sense of how a potential investor lives up to their promises. Ask about resources they’ve provided in addition to financing, ideas or improvements they’ve brought to the table, and areas the reference feels that the relationship could be stronger.
If an angel investor is unable (or refuses) to provide references from their personal business network, it may be a red flag.
Are you looking to open your first restaurant or expand your existing business? Regardless of your goals, we can help! Send us an email or give us a ring at 416-618-0054 to get started.
