InvestMarket is an online Web platform that creates multiple interconnection possibilities among over 5,000 venture investors around the world and entrepreneurs who have business ideas that can not fund them from their own resources, banking or other forms of lending or funding such as Funds European. Every investor participating in this platform comes with important information such as its history and investment portfolios.
For those who are looking for start-up capital or business development, there are multiple funding opportunities. They can obtain, if they have the necessary guarantees and a business plan, money from the local bank, they can invest the money from the capitalization of their properties, they can borrow from relatives and friends. I say, because this is not always the case. The most brilliant business ideas are in bank files or in family council discussions without finding their funding. Here, investors positively intervene, stating that we need to understand precisely the relationships and the ramifications of the consequences of such an approach.
The simple question is: Is it 100% of nothing or 1% 50% or 70% of a colossal deal? The percentages are relative and nothing determines how much they should be. Negotiating these parameters is important. I was saying that 100% of anything is nothing, and no matter how valuable a business idea, it is worth nothing as long as it is not put into practice. Even if entrepreneurs have the pride ever before, they have to understand that it is preferable to have even 0.1% of something palpable than 100% of anything.
It is known that venture capitalists are generally used after exhausting other options: staff, banks, family, friends. If financing is accepted, the investor will request, in exchange for funding, shares in the company’s shares or shares. These may be limited or unlimited. If the business is already running and investment is required to develop it, you can opt for the development finance formula and, for example, the past company’s debts are transferred to the shareholder or the original shareholders.
Investors and exit strategies
Even before signing an investment plan in a business, a plan to exit the business or to continue the business must be developed. It is good to know that, like a bank, after the withdrawal of the investment and the agreed profit side, the investor will withdraw in a certain way from the business or will continue to be active. If it requested social shares as a guarantee of the business, it must be repaid for consideration or offered to the public, as specified in the exit strategy. An investor may own shares or shares and may sell these shares or shares through IPO (public offering, with or without the first-chance clause) or may hold public subscriptions.
Investors and their experience
When investors decide to invest in a company, they may require an important place on the board of directors and / or a position in the company’s asset management structure. This must be perceived with its parts, good and bad, together. On the one hand it’s good because a real investor will provide valuable information to the entrepreneur. However, there are disadvantages, as the entrepreneur has given up a certain percentage of ownership of the company to the investor. The more ownership is transferred to the investor, the more control is transferred to the investor.
As an entrepreneur to get the start-up capital of a business or to develop it from an investor, you will need to develop a well-written business plan. In addition, investors will want to see all company documents, if any, or documents such as business history, checking balance, balance sheet, bank statement or, as the case may be, any other documents. In addition to a well-established business plan, it is necessary for the entrepreneur to have confidence in the plan and the business idea in order to convince the investor that the investment is low-risk. If the entrepreneur has an ongoing business that looks good, the chances of identifying an investor are much higher.
Changing the face of investors
There is a good fear that an investor will have some initial behavior, and then, when the company will launch, it will want to take control of it and, consequently, ownership, by changing its behavior. Such an investor is called Dark Angel and it should be stressed that from the beginning of the business relationship, the limits to which it can be reached should be established. A good lawyer will know how to predict all those situations and where the rights of the parties are protected. It is logical that such an investor does so for profit. As a rule, investors will want only 25% of their shares for them, instead they will prefer those businesses with high return on investment (ROI).
Advantages of investor networks
As in any other field, entrepreneurs can greatly benefit from connecting to a network of investors. As an organization, such a network should be understood as a collective effort in which specific tasks and attributions can be delegated to each individual member. A number of investors can examine hundreds of business plans and share their findings with other members of the network. Since all members have the goal of capitalizing on opportunities together, they can hire larger amounts and, consequently, more valuable projects. Another aspect is the diminishing of the risk factor by investing a little in a high-risk company, because the investment is made in a group and the risks are diminished. If 30 businesses are in business and a member invests in all 30 for a little while only 30% bankrupt, he will have a constant risk factor of + 70%. If it had invested itself alone in one of the businesses and it would have been part of the 30% bankruptcy, it would have had a risk factor of + 100%.
Trends in the investment market
First Investors emerged in the 1980s, being contemporary with Bill Gates and Stive Jobs and have evolved to this day. Increased investment value from 25,000 to 500,000 per business. Investment networks or the largest of today’s investors provide between 500,000 and one million for each business, almost similar to traditional credit systems (banks). The difference is given by the emphasis on the required guarantees and less on the viability of the business (in the case of the bank), in the reverse with the emphasis on the business plan and the high return of money (in the case of investors). This new reality should encourage entrepreneurs to get closer to investors, be prepared to provide a detailed presentation of their business and risks, with supporting documents such as business proposal summary, business forecasts, profit and loss, CAPEX , OPEX, EBITDA, etc. At the same time, this information needs to be protected by a confidentiality agreement called the NDA, addressing all the issues that need to be negotiated or clarified by lawyers. Modern means of communication (digital dimension, the Internet) have made globalization of offers and applications globally possible investments, and email correspondence facilitates dialogue between entrepreneurs and investors.
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