As discussed earlier in my own previous articles, you will find all sorts of different investors around for the entrepreneur to select from. We’ve already covered the forms of investors you will find, which may be business lenders, angel investors, institutional investors, or venture capitalists. This is a broad array of investors that you could see. When you have your organization plan and your executive summary ready, you’re now ready to get the proper investor to request capital.
There are numerous factors that you need to consider before actually contacting your prospective investor. There are lots of things you’ll need to appear into, such as for example stage, industry, and geographic preference. Furthermore, you should also look at their portfolio companies, who they are and what they do. You might find this below.
Basically, stage identifies the stage your company is in. If you’re pre-prototype, or your prototype has just been developed, you’re either seed stage or early stage. These stages are usually the greatest risk stages for investors, but their ROI, or return on investment could possibly be very high. On another hand if your company reaches 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. On another hand, if you’re a business that’s already established and needs bridge funding or expansion funding, you’ll need an investment firm or a private 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. listed infrastructure funds They’re usually stages of companies who are ready for a liquidation event, where in fact the investors exit and make their profits. Which means these companies could be either involved in 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 business needs as it prepares for an IPO or initial public offering. This 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 take the proper geographic location a particular investor might invest in. You can find different investors across the world and small firms might just buy particular geographic location, whereas a few of the larger global investment firms will invest internationally. Other investors may purchase a whole continental area, for example Uncle Vasya Ventures may purchase 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 must discover where their geographic preference is. Sometimes this is shown on the websites, and sometimes not. An effective way to determine what geographic location an investor prefers is by taking a look at its portfolio companies and the countries where they are located.
Industry preference is simply as important whilst the both above mentioned preferences. Usually investors purchase the industries that their partners or portfolio companies have expertise in. When looking for an investor, you’ll need to go through the industry that you are in and you want to have an investor who has the expertise in the exact same industry that you are in. You may have an excellent product, but if you’re in the IT industry and you contact a VC firm that makes its investments in the pharmaceuticals industry, your executive summary will not 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 look at an investor’s portfolio, and see what the industries that the portfolio companies are involved in, you may 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.