subject: Venture capital startups [print this page] Author: austin mathew Author: austin mathew
You are proprietor of a small business company in Minnesota. You always have an idea of expanding your current business. For that you need funds and decided to take a loan for same. But the questions always hunt you, from where and how. What are the options available in the market? So you start exploring each and every thing regarding Venture Capital Minnesota firms. People start looking for financial support and become involved with bankers, firms or brokers without really understanding what they are looking for or to whom they are talking to. These are so many options available like Venture capital, Angel Money, Private Equity, Venture Debt, and Investment bank. But confused what exactly is right for you. So explore some ideas about all this.
Venture capital Startups A venture capitalist is a person who invests in a business venture, providing capital for start-up or expansion. Venture capital firms takes capital from limited partners and spend the money in companies for a share of the ownership. This is not so different than investing money in the stock market. You buy shares and have a say in how the company is run. Venture capitalists are looking for a higher rate of return than would be given by more traditional investments. With Venture capital, it is a private transaction and they require a significant amount of control. They are, however, not interested in running the business on a day to day basis. In other terms, the venture capitalist may have no business experience applicable to the industry your company is involved in, and is focused on the potential rate of return your company can provide.
Angel Money Angels are those who spend their own money in a company for a share of the company. The amount of control the angel wants usually depends on the interest of the person and the interest he or she has in being concerned for the company. Some angels will finance and come in as management; some will invest and stay very hands off in the management of the company. But angel investor often has business experience appropriate to your company and is involved in adding value to your company, as well as making a return on his or her investment.
Equity financing Equity financing is a phrase used for companies which uses issuance of shares of common or preferred stock to raise money. Equity financing is frequently done when it is per share prices are high-the most money that can be raised for the smallest number of shares.
Private Equity Technically, private equity is any ownership stake purchased through a private transaction, which includes Venture Capital and angels. Private equity stakes in a business are mostly sold by private equity firms. Firms can sell these stakes not only to private investors, but also to government and pension funds, as well as hedge funds. Private invest large dollars for a significant stake with the intent of preparing the company for a future IPO or sale. This term also includes leveraged buyout firms.
Corporate Venture Capital Corporate venture capital is a subsidiary of a big corporation which makes venture capital investments. Corporate Venturing is a practice of a large company to take a minority equity position in a smaller company of related field.
Institutional Investors Institutional Investors applies mostly to insurance companies, pension funds and investment companies, collecting savings and supplying funds to markets but also to other types of institutional wealth like endowment funds, foundations etc.
Investment Banks As their name reflects, investment banks neither invest nor do they lend. It is a financial mediator that performs a variety of services which includes underwriting, acting as a mediator between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients. In general, investment banks are intermediaries and not interested in holding possession stakes themselves.
Business Broker Like an investment bank, business brokers are not attracted in financing or investing. They are interested in searching a potential buyer for your company. They mostly have numerous industry associates and have a thoughtful of the value of the company and what are current buy structures.
If you have taken a decision that it is an appropriate time to raise money for your company, you must decide what you want finally. If you are ready to get out of the business, you want an investment bank or business broker. If you are thinking on taking your company to the next level and expanding it to an IPO, then you are certainly looking for venture capital or some sort of debt. If you are looking for the company for a sale, then you may be attracted for a private equity firm. Prioritizing what you want is the answer for getting the most value out of your company. You can also look for cost effective way to immediately hire the unique combination of expertise required to manage and help your business surge ahead of the competition.About the Author:
Austin Mathew is the financial and business strategy consultant providing professional expertise to high growth, early stage companies. It has been associated with those companies which provide capital formation assistance, market research and business intelligence, and business planning strategy. More information about the company can be found at Venture Capital Startups or Venture Capital Minnesota.
