As discussed earlier in my previous articles, you can find all sorts of different investors around for the entrepreneur to choose from. We’ve already covered the types of investors you can find, which is often business lenders, angel investors, institutional investors, or venture capitalists. This is just a broad selection of investors that you might see. Once you’ve your organization plan and your executive summary ready, you are now ready to find the right investor to ask for capital.
There are several factors that you’ll require to take into account before actually contacting your prospective investor. There are lots of things you need to appear into, such as for instance stage, industry, and geographic preference. Furthermore, you should also look at their portfolio companies, who they’re and what they do. You will see this below.
Basically, stage describes the stage that the company is in. If you’re pre-prototype, or your prototype has just been developed, you are either seed stage or early stage. These stages are usually the best risk stages for investors, but their ROI, or return on investment could be very high. On another hand if your company reaches a later stage and already has 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 more than likely a venture capitalist and specializes in high risk investments. On another hand, if you are 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. This implies that you will need an investor, who’s stage preference is either later stage, growth or expansion stage, or mezzanine stage. These are usually stages of companies who’re ready for a liquidation event, where the investors exit and make their profits. This means that these companies may be either involved with a leveraged buyout or LBO, or a managed buyout or MBO. ipe real assets Mezzanine stage is whenever a company is ready for mezzanine capital. This is the capital a company needs since it prepares for an IPO or initial public offering. That is also a liquidation event.
Geographic preference is quite as important as an investor’s stage preference. Your company may fit an investor’s stage preference, but you might not take the right geographic location that the particular investor might invest in. There are different investors across the world and small firms may indeed buy particular geographic location, whereas a number of the larger global investment firms will invest internationally. Other investors may purchase a complete continental area, as an example Uncle Vasya Ventures may purchase 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 must discover where their geographic preference is. Sometimes this really is shown on their websites, and sometimes not. An effective way to figure out what geographic location an investor prefers is by considering its portfolio companies and the countries where they’re located.
Industry preference is equally as important while the both previously discussed preferences. Usually investors purchase the industries that their partners or portfolio companies have expertise in. When looking for an investor, you need to look at the industry that you’re in and you wish to have an investor who has the expertise in exactly the same industry that you’re in. You might have a fantastic product, but if you are in the IT industry and you contact a VC firm that makes its investments in the pharmaceuticals industry, your executive summary won’t be looked at.
Determining an investor’s industry preference can be carried out by first considering 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 confirmed investor might have. It’s essential that you find an investor who’s preferences meet your company profile.