Best ways i can Choose the right Investor For the purpose of Your Industry Preferences?
As mentioned before in my own previous articles, you will find a myriad of different investors around for the entrepreneur to choose from. We have already covered the types of investors you will find, which can be business lenders, angel investors, institutional investors, or venture capitalists. This is really a broad range of investors that you may see. Once you’ve your organization plan and your executive summary ready, you are now ready to seek the proper investor to ask for capital.
There are numerous factors that you might want to take into account before actually contacting your prospective investor. There are many things you need to look into, such as for instance stage, industry, and geographic preference. Furthermore, you should also look at their portfolio companies, who they are and what they do. You will dsicover all this below.
Basically, stage identifies the stage that your company is in. If you’re pre-prototype, or your prototype has just been developed, you are either seed stage or early stage. These stages are usually the greatest risk stages for investors, but their ROI, or return on investment might be very high. infrastructure indices On one other hand if your company reaches a later stage and already features a regular flow of clients, the chance is generally lower to the investor. If your company is either seed or early stage, you will require an investor who is more than likely a venture capitalist and specializes in high risk investments. On one other hand, if you should be an organization that is already established and needs bridge funding or expansion funding, you need an investment firm or a private equity firm that specializes in the later stages of a company’s life. This means you will need an investor, who’s stage preference is either later stage, growth or expansion stage, or mezzanine stage. They are usually stages of companies who are ready for a liquidation event, where in actuality the investors exit and make their profits. Which means that these companies may 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 an organization needs as it prepares for an IPO or initial public offering. This really 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. There are different investors across the world and the smaller firms might just choose particular geographic location, whereas a number of the larger global investment firms will invest internationally. Other investors may invest in a complete continental area, as an example Uncle Vasya Ventures may invest in Eurasia, which may encompass Russia, Central Asia, the countries which 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 must discover where their geographic preference is. Sometimes this really is shown on the websites, and sometimes not. A great 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 equally as important because the both previously listed preferences. Usually investors invest in the industries that their partners or portfolio companies have expertise in. When trying to find an investor, you need to consider the industry that you are in and you intend to have an investor who has got the expertise in the same industry that you are in. You might have a great product, but if you should be 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, the 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.