How does someone Find the right Investor Intended for The Small business Desires?
As discussed earlier in my own previous articles, there are a myriad of different investors around for the entrepreneur to select from. We’ve already covered the forms of investors there are, which may be business lenders, angel investors, institutional investors, or venture capitalists. This is just a broad selection of investors that you could see. After you have your organization plan and your executive summary ready, you’re now ready to get the best investor to require capital.
There are several factors that you might want to consider before actually contacting your prospective investor. There are numerous things you need to check into, such as for instance stage, industry, and geographic preference. Furthermore, it’s also advisable to look at their portfolio companies, who they are and what they do. You will dsicover this below.
Basically, stage refers to the stage that your company is in. If you are pre-prototype, or your prototype has just been developed, you’re either seed stage or early stage. These stages are generally the highest risk stages for investors, but their ROI, or return on investment might be very high. On another hand if your company are at a later stage and already has a regular flow of clients, the chance is generally lower to the investor. If your company is either seed or early stage, you will need an investor who is most likely a venture capitalist and specializes in high risk investments listed infrastructure . On another hand, if you should be a company that is already established and needs bridge funding or expansion funding, you need an investment firm or a personal equity firm that specializes in the later stages of a company’s life. What this means is that you will need an investor, who’s stage preference is either later stage, growth or expansion stage, or mezzanine stage. They’re usually stages of companies that are ready for a liquidation event, where in actuality the investors exit and make their profits. Which means that these companies may be either involved with a leveraged buyout or LBO, or a managed buyout or MBO. Mezzanine stage is whenever a company is ready for mezzanine capital. This is actually the capital a company needs since it prepares for an IPO or initial public offering. That is also a liquidation event.
Geographic preference is equally as important being an investor’s stage preference. Your company may fit an investor’s stage preference, but may very well not maintain the best geographic location a particular investor might invest in. There are different investors around the world and the smaller firms could choose particular geographic location, whereas a number of the larger global investment firms will invest internationally. Other investors may purchase an entire continental area, for instance Uncle Vasya Ventures may purchase Eurasia, which may encompass Russia, Central Asia, the countries which make up the former republics of the Soviet Union and Eastern Europe and Aunt Valya Private Equity might invest only within continental Europe. When seeking an investor, you need to learn where their geographic preference is. Sometimes this really is shown on their websites, and sometimes not. An effective way to determine what geographic location an investor prefers is by looking at its portfolio companies and the countries where they are located.
Industry preference is equally as important since the both above mentioned preferences. Usually investors purchase the industries that their partners or portfolio companies have expertise in. When trying to find an investor, you need to go through the industry that you’re in and you want to have an investor who has the expertise in exactly the same industry that you’re in. You may have a great product, but if you should be in the IT industry and you contact a VC firm which makes its investments in the pharmaceuticals industry, your executive summary won’t be looked at.
Determining an investor’s industry preference can be achieved by first looking at their portfolio companies, and sometimes, the preferences are shown on investors’ website. If you look at an investor’s portfolio, and see what the industries that the portfolio companies are involved with, you will get a view of what industry preference certain investor might have. It’s important that you find an investor who’s preferences meet your company profile.