How to Find the appropriate Investor Regarding My own Enterprise Wants?
As discussed earlier within my previous articles, you can find all sorts of different investors around for the entrepreneur to decide on from. We have already covered the types of investors you can find, which can be business lenders, angel investors, institutional investors, or venture capitalists. This is just a broad selection of investors that you might see. Once you have your organization plan and your executive summary ready, you are now ready to seek the best investor to require capital.
There are several factors that you might want to take into consideration before actually contacting your prospective investor. There are many things you will need to check into, such as for example stage, industry, and geographic preference. Furthermore, you should also look at their portfolio companies, who they’re and what they do. You will dsicover all of this below.
Basically, stage describes the stage your company is in. If you are pre-prototype, or your prototype has just been developed, you are either seed stage or early stage. These stages are often the greatest risk stages for investors, but their ROI, or return on investment might be very high. On one other hand if your company reaches a later stage and already features a regular flow of clients, the risk is generally lower to the investor. If your company is either seed or early stage, you will require an investor who is probably a venture capitalist and specializes in high risk investments. On one other hand, if you’re a business that’s already established and needs bridge funding or expansion funding, you will need an investment firm or an exclusive equity firm that specializes in the later stages of a company’s life. What this means is you will need an investor, listed infrastructure funds who’s stage preference is either later stage, growth or expansion stage, or mezzanine stage. They’re usually stages of companies who’re ready for a liquidation event, where the investors exit and make their profits. Which means these companies can be either associated with a leveraged buyout or LBO, or a managed buyout or MBO. Mezzanine stage is each time a company is ready for mezzanine capital. Here is the capital a business needs since it prepares for an IPO or initial public offering. This really is also a liquidation event.
Geographic preference is just as important being an investor’s stage preference. Your company may fit an investor’s stage preference, but you might not take the best geographic location that the particular investor might invest in. You will find different investors throughout the world and the smaller firms could choose particular geographic location, whereas a few of the larger global investment firms will invest internationally. Other investors may spend money on an entire continental area, like Uncle Vasya Ventures may spend money on Eurasia, which will encompass Russia, Central Asia, the countries that produce 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 find out where their geographic preference is. Sometimes this is shown on the websites, and sometimes not. An effective way to figure out what geographic location an investor prefers is by looking at its portfolio companies and the countries where they’re located.
Industry preference is equally as important as the both above mentioned preferences. Usually investors spend money on the industries that their partners or portfolio companies have expertise in. When trying to find an investor, you will need to look at the industry that you are in and you wish to have an investor who has got the expertise in the exact same industry that you are in. You may have a great product, but if you’re in the IT industry and you contact a VC firm that produces its investments in the pharmaceuticals industry, your executive summary will not be looked at.
Determining an investor’s industry preference can be carried out by first looking at their portfolio companies, and sometimes, the industry preferences are shown on investors’ website. If you look at an investor’s portfolio, and see what the industries that the portfolio companies are associated with, you will get a glimpse of what industry preference confirmed investor might have. It’s essential that you find an investor who’s preferences meet your company profile.
As discussed earlier within my previous articles, you can find all sorts of different investors around for the entrepreneur to decide on from. We have already covered the types of investors you can find, which can be business lenders, angel investors, institutional investors, or venture capitalists. This is just a broad selection of investors that…