As mentioned before within my previous articles, there are all sorts of different investors around for the entrepreneur to decide on from. We’ve already covered the kinds of investors there are, which may be business lenders, angel investors, institutional investors, or venture capitalists. This is really a broad range of investors that you may see. When you have your company plan and your executive summary ready, you are now ready to find the right investor to look for capital.
There are several factors that you might want to take into account before actually contacting your prospective investor. There are many things you’ll need to appear into, such as stage, industry, and geographic preference. Furthermore, you should also look at their portfolio companies, who they’re and what they do. You will see all of this below.
Basically, stage identifies 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. infrastructure debt These stages are usually the best risk stages for investors, but their ROI, or return on investment could possibly be very high. On one other hand if your company is at 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 be needing an investor who is probably a venture capitalist and specializes in high risk investments. On one other hand, if you are an organization 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. 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 that are ready for a liquidation event, where the investors exit and make their profits. Which means these companies could 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. This is actually the capital an organization needs because 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 you may not take the right geographic location a particular investor might invest in. You will find different investors around the world and the smaller firms might just buy particular geographic location, whereas some of the larger global investment firms will invest internationally. Other investors may spend money on a complete continental area, as an example Uncle Vasya Ventures may spend money on 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 this really 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’re located.
Industry preference is just as important whilst the both previously listed preferences. Usually investors spend money on 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 will be in and you want to have an investor who has the expertise in the exact same industry that you will be in. You could have an excellent product, but if you are 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 done by first taking a look 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 may get a view of what industry preference a given investor might have. It’s important that you find an investor who’s preferences meet your company profile.