Derisking is the process of removing risk factors from your business in order to make it more attractive to an outside investor or to an outside buyer. It is one of the most important factors in the grooming process in order to be an attractive company to invest in i.e. "Investor Ready". There are dozens of areas and hundreds of ways in which a business may be exposed without knowing it. In the normal course of business an owner may not worry about these factors, as they are within the "comfort zone" of operation. For an external party to get involved however, they need a much more transparent organisation so they are not confronted at a later date with skeletons in the closet.
Venture Capital is a specific term that refers to funding obtained from a venture capitalist. These are professional serial investors and may be individuals or part of a firm. Often venture capitalists have a niche based on business type and or size and or stage of growth. They are likely to see a lot of proposals in front of them (sometimes hundreds a month), be interested in a few, and invest in even fewer. Around 1-3% of all deals put to a venture capitalist get funded. So, with the numbers that low, you need to be clearly impressive. Growth is usually associated with access to, and conservation of cash while maximising profitable business. People often see venture capital as the magic bullet to fix everything, but it isn't.
The single most frequent question that I receive about raising capital is to raise capital from friends and family. Of course, people want to know where to get big money too -- but you have to learn to walk before you run, so I have put together a beginner's guide to successfully raising the money that you need to launch or grow your business from people who are close to you. The Bad News Access to capital in the United States is not a constitutional right. Unfortunately, many people will simply not get any. The Good News If you do it right, money will flow your way. But do you want to know the $64, 000 question? Here it is: What does it mean to "do it right"?
Raising Big Money Professional Investors These are people who are looking to put serious money into a new product or business that has the potential to give them a good return. They may put anywhere from $50, 000 to $1, 000, 000 into a project. Expect them to be very careful about where they put their money and check and double check everything about your product and business. Also expect them to try to negotiate a deal that is good for them. You can find these investors through other start-up companies, at entrepreneur clubs or venture conferences. Venture Capitalists These are firms that invest in companies with high-growth potential, experienced management and a sound business plan.
A positive data point that the bottom may have been reached is that per the University of New Hampshire's Center for Venture Research mid-2009 report is that angel investment numbers have started to rise. During the first half of 2009, angel investors financed 24, 500 new ventures, 6% more than during the same period in 2008. The figures suggest that 2009 will have shown the birth of roughly 50, 000 companies-all funded by angel investors and not venture capital firms. In a November 12 Business Week article Spencer Ante reports that angel activity continues to rise and great ideas are still out there. "It may be that this is the best time to start a company, " says Carl Schramm, president of the Kauffman Foundation, an organization that promotes entrepreneurship.
If you're a business owner or entrepreneur who wants to find a way to increase sales and enter new business arenas, a joint venture is a great way to break into new horizons. An entrepreneur with savvy business acumen can research, find, and negotiate a JV deal with another business that can help achieve new business goals. And a few lessons from the world's largest retailer, Wal-Mart, may be helpful in finding creative JVs that will help expand your business. How Wal-Mart Entered India with a JV In 2009, Wal-Mart started doing business in India for the first time. However, the Indian Wal-Mart is not the typical Wal-Mart retail superstores you see in most every small, medium, and large city in America.
When you are raising private money to buy real estate, you typically have a target number in mind for how much you need from investors. By performing a project budget and financial projections, you determine the right number. Perhaps you need $100, 000 to buy and rehab a foreclosure house. Maybe you need $2, 500, 000 to buy a commercial building. Whatever number you think you need, write it down on paper. Now DOUBLE IT. That's right. DOUBLE IT. There's an old rule of thumb when it comes to raising capital: always ask for more money than you need. This is for two reasons: 1. Your numbers may not be 100% accurate Surprise! Yes, this does indeed happen sometimes.
Equity capital, unlike debt capital, is when someone or some company invests in a company in return for shares or stock in that company. Angel investing is generally done as such an equity investment. This money does NOT need to be paid back to the investor. Rather, the investor generally gets paid when there is a liquidity event, which is the event through which the company "cashes out" such as being sold to another company or having an initial public offering or IPO. Note that a liquidity event is also known as an "exit." Note, however, that in some angel investments, angel investors can be paid dividend payments or profit sharing over time, and sometimes angel investments are structured as convertible promissory notes.
Those in need of credit debt relief have a few options to help them get out of debt fast, and debt grants are one of those options that many Americans can qualify for. Grant money are funds that are provided by the government, non-profit and other private organizations to help you meet your goals. What makes debt grants so unique is that they are not loans and the money never has to be paid back. Because the credit debt relief programs are not loans, that also means that qualifying to receive some of this financial aid may not require you to have a good credit score, down payment money, income verification, or any kind of collateral. Debt grants are provided on a needs bases to help those who are facing financial hardship.
I get asked more than ten times a day how much capital a person needs for a new start-up venture. This is a very hard question to answer as it depends on many, many things including: Will you rent/lease or purchase space? What industry the start-up will participate in? What geographical location? How much marketing will be required or how much consumers will need to be educated on the product/service and its benefits? Where the economy is going? How much it costs to build the product or provide the service? Etc, etc, etc. Even if the entrepreneur receives just a single number - there is no way to tell if this will be correct until after the fact - there are just too many variables.