Friday, 25 August 2017

What Venture Capitalists Look For In New Investments?

If you’re thinking of bringing in new investors, they’ll want to know how much your business could increase in value if they buy shares. To work this out, they’ll need to know how much their investment will increase your sales and profitability. Just provide potential investors and lenders with a financial model presenting how business will use the more money to boost profitability and sales. Also, how initial prices and augmented ongoing prices will affect the cash flow. Usually, sales increases only after taking on additional expenditure like employing more staff, putting in huge orders for raw materials or moving to bigger premises. So, there is a need to take all these spending in control while doing financial planning.

Often, growing your business means it needs more investment, whether through improved profitability or increased sales. It can be done by taking out a loan, putting previous profits back into business, put up shares for sale to outside investors as well as searching for other financing sources including government-backed schemes.

Now days, landscape of business financing is changing drastically as more options are available to business owners which were very limited few years back. Almost half of businesses are seeking financing from several no. of places like owner investments, non-bank sources etc.  Most of the businesses face challenges while taking advantage of growing opportunities and also at the time of gaining access to capital. So it’s really important that they seek the right way of financing according to their needs. Recently, it has been seen that businesses are focusing on “alternative” lending option, but the question is how do they know that is this the right option to pursue?

Answer to this question is that businesses should seek financing when they face an unexpected challenge or opportunity because at that time there is a need of quick capital. It has been seen that most of the time; businesses don’t have enough cash on reserve or any other source of credit that will help them in withdrawing required funds during these types of opportunities. These alternative fund lending sources help in filling that void by giving access, speed availability to business owners. 

To verify what kind of financing makes sense for business as well as situation, one must consider the exact need of the funds and the timing. Alternative fund lending sources helps in providing repayment flexibility and offering creative options that fluctuates along with sales volume. It's also in need to understand the rates that are associated with while choosing other source of fund lender. This type of funding is often costly than old-fashioned bank loan as these companies act as borrow capital, liaisons from several other financial institutions which guarantees the payment. Basically, when the client defaults, they absorb the risk as well as the losses.

Angel investors find interest in the next generation ideas and willingly fund startup ideas they find worth. They usually focus on technology startups. Although the process of receiving funds from an angel investors might be straightforward, but they always expect to see complete business plan along with financial projections. This funding option is perfect for technology-focused businesses, but still need guidance in product creation and marketing. Apart from providing money, angel investors also give guidance to that business owner looking for more experienced partners. They might also anticipate a certain degree of influence on how the company is running.

Moreover, as a founder your main goal should be growing more and more professional network. At the time of need for funding, you never know who might be next funding opportunity or source. Also, some investors can be a public figure who can be reached online. Several other investors mainly anonymity and it’s quite hard to search for any kind of information about them.

Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Joint Venture Advisory, Financial Advisory,  Private Equity,   Debt Financing and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.  

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