As discussed earlier within my previous articles, you can find all kinds of different investors around for the entrepreneur to select from. We’ve already covered the forms of investors you can find, which may be business lenders, angel investors, institutional investors, or venture capitalists. This is just a broad range of investors that you may see. After you have your organization plan and your executive summary ready, you’re now ready to seek the best investor to request capital.
There are numerous factors that you’ll require to take into account before actually contacting your prospective investor. There are numerous things you’ll need to appear into, such as for instance stage, industry, and geographic preference. Furthermore, you should also look at their portfolio companies, who they are and what they do. You will see all of this below.
Stage Preference
Basically, stage refers to the stage that the company is in. If you should be 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 could possibly be very high. On the other hand if your company is at a later stage and already includes a regular flow of clients, the danger is generally lower to the investor. If your company is either seed or early stage, you will be needing an investor who’s most likely a venture capitalist and specializes in high risk investments. ipe real assets On the other hand, if you’re an organization that’s already established and needs bridge funding or expansion funding, you’ll need an investment firm or a personal equity firm that specializes in the later stages of a company’s life. This means 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 who are ready for a liquidation event, where in actuality the investors exit and make their profits. This means that these companies may be either involved in a leveraged buyout or LBO, or even a managed buyout or MBO. Mezzanine stage is whenever a company is ready for mezzanine capital. This is the capital an organization needs because it prepares for an IPO or initial public offering. That is also a liquidation event.
Geographic Preference
Geographic preference is quite as important as an investor’s stage preference. Your company may fit an investor’s stage preference, but may very well not be in the best geographic location that the particular investor might invest in. There are different investors throughout the world and small firms could buy particular geographic location, whereas a number of the larger global investment firms will invest internationally. Other investors may invest in an entire continental area, for example Uncle Vasya Ventures may invest in Eurasia, which will encompass Russia, Central Asia, the countries that 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 ought to learn where their geographic preference is. Sometimes that is shown on their websites, and sometimes not. A good way to figure out what geographic location an investor prefers is by taking a look at its portfolio companies and the countries where they are located.
Industry Preference
Industry preference is simply as important since the both previously discussed preferences. Usually investors invest in the industries that their partners or portfolio companies have expertise in. When trying to find an investor, you’ll need to go through the industry that you are in and you want to have an investor who has got the expertise in exactly the same industry that you are in. You might have an excellent product, but if you’re 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 done by first taking a look at their portfolio companies, and sometimes, a preferences are shown on investors’ website. If you appear at an investor’s portfolio, and see what the industries that the portfolio companies are involved in, you will get a view of what industry preference confirmed investor might have. It’s important that you find an investor who’s preferences meet your company profile.
