Equity Investments for Large Markets

An equity investment is defined as the purchasing of one or more shares in the ownerships of a business by an investor. These investors are then entitled to shares of the company’s assets in the case of liquidation. These shares of stock may be bought and sold among stockholders.

Equity investments are for companies with:

◦More than $25 million in gross revenue potential
◦Large National or International market potential
◦Management teams with successful track records


Capital Type Capital Type Definition

Equity Loan - Offer of an ownership position to induce the loan or can be a note that has an option to convert from debt to equity.

First Round Funding - Typically funding that accomodates growth. Company may have finished R&D. Funding is often in the form of a convertible bond.

Second Round Funding - Maturing company where a future leveraged buyout, merger or acquisition and/or initial public offering is a viable option.

Later Stage Funding - Mature company where funds are needed to support major expansion or new product development. Company is profitable or breaks even. Merger and Acquisition Funding - The combination of two companies. If one company survives, it is a merger. If both survive, it is an acquisition.

Mezzanine Funding - Company’s progress makes positioning for an Initial Public Offering viable. Venture funds are used to support the IPO.

Seed Funding - Earliest stage of business, typically no operating history. Investment is based on a business plan, the management group backgrounds along with the market and financial projections.

Difference Between Angel Investing and Venture Capital (VC)

How to Make Your Startup More Appealing to Venture Capitalists

Finding enough funding is often one of the hardest parts of starting your own company. Venture capitalists can be the solution to your small business financing needs, provided you entice the right ones to your enterprise. The Washington Post reported that venture capitalists contributed $26.5 billion to start-up firms in 2019. So how do you attract investors and secure a piece of that funding?

Highlight Your Business’ Unique Selling Points

Venture capitalists – individuals or groups willing to put their own money into new companies – are looking for business that is going to succeed. That means one that offers something unique to its market, one that is hard for other companies to copy and one that has a sustainable market of customers. Can you prove to investors that there are enough people really willing to buy your goods? Is your offering something so one-of-a-kind that it can be patented and protected from duplication? When you present your small business to VCs, make sure they leave feeling like your product or service is going to be “the next best thing.”

Network, Network, Network

In order to attract venture capitalists you really need to know some venture capitalists. Insiders say they invest very little into unknown people and companies. Most of their funds go to companies run by those who have networked into them. The point? Get out there and start making some connections. Try asking your attorney, your investment broker, your banker if they know any VCs who might be interested in your business. Go on social media and search out VC firms. Attend local fundraising events to hobnob with those who have cash to spare. Making some personal contacts is by far the best way to secure VC funding.

With some serious networking and a solid business model to present, you are sure to find financing from venture capitalists that will take your company to the next level.

5 Things Investors Want to Hear From You!

Pitching your company to angel investors or venture capitalists can be intimidating, especially when the fate of your start-up small business rests in their hands. In preparing your presentation, keep in mind that angels and VCs are essentially looking for five key ingredients in your business plan.

Market Size

Investors will want to know how large the market is for your particular product or service. You could have the best idea in the world, but if there is a very limited number of people who could possibly patronize your business then your product or service will never have the potential to make a lot of money. And the potential for great profits is the bottom line investors are watching.

Market Need

Once you have shown the angel investors or venture capitalists that there is a large enough market for your business, you need to prove that there is a real need for your service. Does your product or service truly offer something that the market needs, something that could significantly improve on or add to existing options?

Competition

Investors will want to know who your direct competitors will be and how many there are. Are there already companies that dominate the market in your specialty? If so, you need to show how you can outdo your competition to become the front runner.

Profitable Business Strategy

Your business needs to have all the right parts and pieces in place to make money. Investors want to hear about how you are going to keep your overhead costs down, how you already have the perfect manufacturer for your product, how you plan to offer faster servicer than what is available. They want to know how many employees you have or need to be efficient and quickly your business can start turning a real profit. How are you going to run your business so that it can become a smashing success?

The Right Person

Finally, investors are looking for the right person for the job. They want to see that you have the drive and passion to put your ideas into action. They want to know that you are driven and will work tirelessly to put their money to good use. You have to sell yourself as part of the investment.

If you can distill your business pitch into these five basic elements, you should be able to secure the funding you need to thrive.