All too often, troubled investor relationships end up with restaurants in trouble. For upcoming chefs and restaurateurs who need capital, selecting the right restaurant investor is critical and often makes the difference between success and failure. One of the most important considerations is the level of expertise and the type of relationship these investors provide.
In the restaurant industry, you’ll find two common investors, those solely concerned about the investment for themselves and those who view the investment as a partnership.
Some investors take the role of the money lender. Period. They invest so much money in a given amount of time, and the rest is up to the borrower. Some entrepreneurs look for this hands-off type of investor who provides funds in exchange for a future return or an ownership stake.
This investor may appeal to restaurant start-ups wanting to maintain the essence of complete ownership and retain the ability to make important decisions on their own. However, if you can enter into a partnership with an experienced and successful investor who has walked in your shoes, done the work, and come out the other side triumphantly, you’ve gained business knowledge that is hard to come by and can pave the way to successful ventures for years to come.
The association between an investor and a borrower is, in many ways, like a long-term relationship and demands the same kind of scrutiny. Don’t jump into an investment relationship because you’re desperate for capital. Take your time and explore your options, and if you feel like you’re being pressured in any way, consider that a red flag. High-pressure sales tactics are almost always a no-win situation.
An experienced and successful investor in your niche offers expertise and skills in addition to capital. The key is finding an investor/partner that’s successfully traversed your sector. For example, if your concept is fine dining and your investor has experience in quick service, the gap may negate the valuable information and knowledge they may have otherwise provided.
Working with industry insiders gives you access to proprietary deals unavailable to those outside the profession. Industry experts can also demonstrate a track record of value creation and have developed key relationships that take years to carve out. These investors help you tap into new markets and successfully navigate the current supply chain upheavals.
Highly Experienced Industry Insiders
Funds with highly experienced team members in their niche offer a unique viewpoint. They can analyze business operations from the foundation up and offer advice that develops a solid structure in ways that an investment banker cannot. This way, restaurants build sustainable growth instead of rapid growth spurts that die off.
These insiders also know the upcoming trends and have, in many ways, disrupted and revolutionized the industry. For those looking to remain on the cutting edge of today’s fast-paced technology, working with those who have “walked a mile in your shoes” or, in most cases, thousands of miles, can quickly build strategic alliances that would otherwise take tremendous time and energy to develop.
In the end, entrepreneurs significantly reduce their risks in all areas and outperform those “breaking through” without the support of veterans.
The EMERGING Fund
EMERGING Fund’s innovation partners consist of groundbreakers and trendsetters in the fields of social entertainment concepts and restaurant technology (ResTech). It is the only fund led by successful restaurant and ResTech founders and offers the largest acceleration platform.
Through mentoring, innovative collaboration, and activating trusted relationships with over 200,000 restaurant units, the EMERGING Fund helps entrepreneurs reach their potential. These industry relationships also offer strategic exit opportunities, and prior investments have demonstrated quick, out-sized returns.
Is there a growth strategy in place?
EMERGING provides advanced data analytics to guide strategic growth and evaluate real estate and technology opportunities to effectively minimize risk and maximize returns.
What is EMERGING Fund’s capital plan?
EMERGING Fund’s capital plan is a total of 8-12 investments, up to approximately $10 million per investment. The MOIC and IRR target is 6X & 40%. In comparison, the average private equity and venture capital firms in the U.S. have a MOIC and IRR of 2.8X & 18.96%, and 2.6X & 19.8%, respectively.