June 29, 2010
You know that the key way to get the funding you need for your company is to meet the right investor. Now, you are probably asking the question, which investor is the right investor? The investor that gives the funding is the right investor, right? Well, thatâ€™s right in a way, but thatâ€™s not exactly the way the cooky crumbles.
Finding the right investor can take some work and it all depends on several factors. The first factor is what industry you are in. The right investor should be an investor who invests in your industry. He should be knowledgeable in the industry that you invest in. Investors usually have industry preferences and these preferences are usually based on the experience and expertise the investor has in that particular industry. He should know what the markets are for that particular industry and possible worked in that industry as either an entrepreneur himself or held a key management position in that particular industry. In the case of a venture capitalist or other formal investor, he also has connections with other experts in the industry who can give you inside resources that can help your company turn a profit. This is very important because you may find things out that can benefit your company in the long run.
Stage is another important thing that investors look at before they invest in a particular company. For this reason, the right investor for you should have the stage preference for the stage that your company is in. For example, startup companies yield very high risks, but the ROI they can yield can also be very high, therefore some investors will have a stage preference for startup, series A and B with the expectation that their ROI can outweigh the risks of the investments they place in these companies. On the other hand, other investors prefer to invest in companies who are in their later stages. For example, in a later stage company that is seeking investments for growth or expansion or mezzanine funding to prepare for an IPO, they will need investors who have a later stage preference. With later stage companies, the risks of the investments are rather low and ROI can vary from company to company. For example, a company has successfully completed their series A and B funding rounds and has noticed that its product is in high demand and wants to expand, that company will want to find an investor who can invest in growth or expansion stage. When a company is ready for an IPO, that means that it is preparing to be publicly traded on the stock exchange. These companies seek mezzanine funding to bridge funding gaps in preparing their IPO. There are investors who invest in mezzanine stage and can also provide those entrepreneurs with expertise related to going public.
Some investors expect to have an MBO or LBO when they exit from the investment. This means that eventually, you will have to sell your company to the investor or to a company that the investor has dealings with. An MBO is a management buyout and investors who require an MBO usually work together with the management of the company and eventually buy the company from the entrepreneur. An LBO is a leveraged buyout and this usually happens if a company has some financial difficulties and the investor could leverage a buyout of the company.
Geography can also play a role whether your prospective investor will decide to invest in your company or not. Thatâ€™s right, all investors have their geographic preferences and will only invest in a specific location, country, region of countries or internationally. Many international investors have their expertise of different countries and how their markets work there. International investors will also take into account how governments function in those given countries, relationships with business entities, etc. Smaller investors tend to invest closer to home. This means that they will usually invest only within the local area that is within a 60 to 100 mile radius from their home or office. Other medium sized investors will invest nationwide.
You can meet the right investor when you visit VCgate.com and buy our complete Venture Capital, Angel Investors, and Private Investors Database. With this database, you will be able to take advantage of our easy-to-use interface that allows you to select investors by stage, industry, and geographic preference and you are also email many of them at once with the single click of your mouse.
You can meet the right investor and get the capital you need for your company by taking advantage of the resources VCgate has to offer, so wonâ€™t you take the plunge?
All the best and good luck!
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