FINTECH AND THE 4TH INDUSTRIAL REVOLUTION

Software and computer engineering are creating a groundswell for what many have deemed the fourth industrial revolution. This next wave in the way companies, technologies, and people interact, work and live relative to one another is likely to be more transformative than any previous industrial revolution we have yet seen. The breadth and depth of the impact of this 4^th revolution will quickly penetrate nearly every industry. Perhaps one of the most impacted will be the financial services world where antiquated tech has remained the status quo for many years. To fully appreciate the overall impact of the 4^th “wave,” it will be important to first understand the history and origin of the other three industrial revolutions. It will also be illuminating to track some of the drivers of today’s industrial revolution as well as the general hallmarks and impacts on the financial services world.

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UNLIKE ANY OTHER

Central to today’s industrial revolution is the idea that engineering—namely computer and software engineering—will drive its current rate of expansion. It Would be Startups or Stabled Businesses in the Search of Corporate Finance, Investment Banking, and other finance related Services  But first, let’s start from the genesis of such revolutions.

1 st Industrial Revolution. The first industrial revolution was built on water and steam to power transportation and merchandise production. It used heat, water and steam to power large mechanical advances in factories and transportation via railways.

2 nd Industrial Revolution. The second industrial revolution was fueled by the implementation of electrical power. Thanks to engineers like Thomas Edison and Nicholai Tesla, further expansion and mass production were made available. In addition, greater productivity was realized through the invention of devices like the light bulb and eventually smaller electric-powered devices created a productivity wave reached down to the masses.

3 rd Industrial Revolution. The third industrial revolution brought about the combination of information technology and electronics to automate everything from production to business processes. Much of this was powered by the personal computing revolution.

The 4 th  Industrial Revolution stands on the shoulders of the Third in that it uses digital technology to facilitate and further automate systems and processes that required physical, human capital. This wave of automation is changing the way we interact with machines and computing. It is also blurring the lines between industries, technologies, and the physical and digital worlds themselves.

This world is a lot of great business ideas and ready for the next Revolution, but only a fraction of those would-be entrepreneurs ever find a way to finance their startups and dreams. Business loans are hard to come by and few people have the personal resources to finance a startup.

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HALLMARKS OF THE 4^TH INDUSTRIAL REVOLUTION

One of the biggest trends of the digital revolution that will be different than all previous trends is the speed with which it will unfold. Previous revolutions evolved in a linear way. Most expect the 4^th wave of industrial engineering to take an exponential growth path. New technology will help drive the revolution, but the interconnectedness of systems, processes and technology will drive impactful changes in nearly every sector at break-neck speed. The impacts will be system and industry-wide. There will be few that will be left unaffected. Here are some other detailed hallmarks we might expect to see from this digital wave:

·     Technology will begin to substitute, not just complement, the work of other services including some of the most technically-driven services on the market. Engineers (including financial engineers) will not be able to pass the fray unaffected. I expect the impact to jobs may be greater than we might have expected.

·         The delivery of products and services to fit the needs of demanding clients will accelerate. Supply chain and engineering will work together to quickly supply the needs of clients across industries. You thought Google and Amazon were spurring on “on demand” mentality for information and products? The Fourth Revolution will spur a further requirement in products and services at both the consumer and commercial level like never before seen.

·         Competition for products and services will skyrocket. Delineation of tasks within organizations will become more focused, but expectations for understanding and being able to work across functions will increase. Traditional firms will look antiquated as many newer firms with much different models crop-up. Supply-side competitive dynamics are likely to look more like a mess of spaghetti.

·         As engineering solves many of the issues that require regulation, including automating human processes required to keep people and programs in check and running smoothly, regulation will progressively be reduced, thereby loosening the current level of restrictions.

·         Existing incumbents will not only be slow to react in the rapidly-changing environment, but there will be struggles to remain profitable with antiquated business models. For the larger incumbents, the technology and intellectual property will create a hot-bed for Fintech M&A.

Mega-trends are brewing from this perfect storm of activity. The supply-side transformation will continue to manifest itself across the financial marketplace. The revolution involves more than simply efficiency and productivity gains. The disjointed disruption has yet to hit financial services at the same scale as Uber or AirBNB, but the wheels are in motion. Out-of-the-box solutions for technology-enabled finance will occur as boundaries drop. It is exciting to be in the middle.

About ALCOR Mergers and Acquisitions

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

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SEED CAPITAL VS VENTURE CAPITAL

In the business world, Seed Capital and  Venture capital are twin cash generating sources you'll want mainly once you’re setting out your business venture. However, each doesn't seem to be a similar technically speaking. Each source is similar in some cases however nonetheless they disagree plenty in numerous aspects. To know what seed capital signify, there's got to take a glance at them from 3 completely different angles namely:

The Definitions

Seed Capital and Venture capital have their separate definitions loaded with which means. You wish to require cognizance of this truth to maximize their advantages as they fit your business arrange.

Seed Capital: merely speaking, Seed Capital refers to the money you wish to urge your business started. This money might return from your relations, friends and alternative external people. Angel investors commonly fill the gap once you’re unable to supply for the seed capital from your immediate family and friends. Indeed, not everybody has flush relations and friends. Hence, for such folks, aiming to meet the angel investors ought to be the simplest possibility. Thus, seed capital is just the fund you wish to urge your business off the bottom.

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Venture Capital:  Venture capital that is additionally referred to as VC refers to fund required to start out an even more significant business. This point around, the target is principally for cluster of people United Nations agency have an interest in building real larger corporations or firms. The capital is provided mainly in actual profit exchange for the shares of the company that's exacting for such fund. Capital is principally sourced from venture capitalists that raise the required resource from their adroitness in managing the pool of alternative people’s cash. They sometimes invest these funds in remunerative firms that ar guaranteed to yield quality returns. Many times, teams of people that need to use venture capitals ought to be able to establish technological companies, information industrial school firms, or the other profit yielding business venture with a technical background. This is often because; venture capitalists believe that such companies once they begin operation are seeming to grow in leaps and bounds.

The Similarities

Indeed, there are some real similarities between Seed Capital and Venture capital. Initial of all, each is merely avenues designed to boost smart money for the smooth take-off of business ventures. This is really the first similarity you’ll notice in each portfolio. Another similarity you’ll realize lies within the truth of the involvement of the angel investors in each avenue. However, during this case, they assume another language. They need their system of finance in more important business ventures.

The Variations

Indeed once it involves the variations, you’re aiming to discover plenty of seed capital and Venture capital. The changes are clear and direct.

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The initial distinction you’ll notice is that the incontrovertible fact that capital is principally meant for giant firms solely. Hence, capital might solely be accessed by a cluster of people that have a clear-cut proposal double-geared toward the institution of a giant company. In most cases, technological firms are most popular. One more vital distinction among capital and Seed Capital lies within the truth of the varied sources of the fund concerned. On the opposite hand, once it involves capital, the sources of the fund don't seem to be directly from the pockets of the inventors concerned. Venture capitalists get the cash from the pool of professionally managed fund happiness to others. This is often the most reason why they don’t invest in normal people. Again, another distinction between seed capital and capital lies within the truth of the usage of such funds. Whereas venture funds are commonly utilized in serving to large firms start, seed capital might be employed by one individual to urge his or her business off the start-up line. In most cases, the companies that commonly have the capital sometimes have technological and scientific backgrounds. The investors that grant the funds forever prefer to invest in ICT and technical firms that they're certain can see the sunshine of the day. On the opposite hand, seed capital is just utilized in fixing little and medium scale businesses. However, the individual concerned ought to gift the angel investors with realizable business arrange that will not tie the fund down once it's discharged.

Finally, another distinction between Seed Capital and Venture capital is additionally detected within the volume of money that's sometimes discharged. Whereas Seed Capital is typically not all that too bundle, Venture capital is typically a awfully handsome quantity that may facilitate a giant company initiate. During this case, the investors also are commonly concerned within the growth method of the corporate being sponsored.

About ALCOR Mergers and Acquisitions

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.

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Raising Seed Capital the Right Way

While seed funding is often the easiest round of funding to obtain, it’s also the foundation on which you’re building your entire business. Make sure it’s solid. Friends and family are second only to personal savings and credit when it comes to seed funding sources for startups. And there’s a good reason for that. Investing in a startup with no financial statements, incomplete (or nonexistent) corporate structure, and no assets or intellectual property to speak of is the very definition of high risk. Who else is going to hand you the thousands to tens of thousands or more to get your company off the ground?

That’s why very few entrepreneurs can avoid relying on their personal networks for funding when first starting out. The key to making that work is to be deliberate, cautious and clear when setting expectations. Starting with a shaky foundation is setting yourself up for failure whether you’re talking code or organizing your company’s financing and legal structure. Here are the rules for making sure everyone’s on the same page.

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Be Fair

Overvaluation is one of the biggest mistakes a startup can make and one that can really hurt friend and family investors in the long run. Appreneurs are optimistic by nature so it’s not surprising, but fixing overvaluation after the fact is difficult if not impossible. Research how much similar app startups are valued at and think about consulting an accountant or lawyer to estimate market rate. Start with comparables and conservative financial projections to determine a value and then test it.

Be Selective

That rich uncle might look like a juicy prospect, but if he’s never invested in a startup or is in an industry wholly unrelated to the mobile space or specific industry you’re targeting, you should cross him off your list now. Well-connected friends and family are worth their weight in gold and seed investors that will be stepping stones for follow-on financing will get you much further much faster. And don’t rush to set up meetings with anyone and everyone. Limiting your list to accredited investors–those who earn a minimum of $200,000 per year or have a net worth of at least $1M will also eliminate potential legal problems when it comes time for IPO.

Think Big Picture

Ask for help, not money. A modest investment is great, but connections are what can make your company grow long-term; if people are interested in investing, they’ll offer. If not, at least you’ll get them working on your behalf to generate other leads.

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Keep It Simple

Offering preferred shares is a way to offer a higher return on investment in exchange for limited engagement. However, having a bunch of different investors with different kinds of shares can be incredibly difficult to manage, especially when you’re focused on launching and maintaining a business. Unless you have a background in finance or are experienced with those kinds of fee structures, it’s best to keep it simple. You can always add complexity later in the lifecycle of your company.

Convey Risk

You have a ton of confidence in your business concept–as you should–but, the fact is, 90% of startups never make it out of the seed phase. It is essential friends and family understand just how risky the investment is that they’re making because the last thing you want to do is jeopardize your relationships. There should always be a repayment plan or equity exchange in place, but consider straight-up asking them if they’re willing to lose their investment entirely. It’s a harsh reality of the seed stage.

Be Ready

You’ve gotten to “yes.” Now is the time to hire a professional. You should be prepared to provide all investors, including early-stage friends and family, with official, detailed and binding documentation about the investment structure. There’s no faster way to burn bridges than to hand out nothing more than a smile and a promise in exchange for seed capital. Treat your friends and family like the investors they are and, chances are, they’ll continue to be your champions as your company matures and grows.

About ALCOR Mergers and Acquisitions

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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Managing Your Working Capital

Working capital is believed to be the life line of companies that are based on product. Without the required working capital for purchasing materials, pay your employees, or do marketing of your products efficiently, one will find your new business venture. It’s quite obvious most people don’t want to become their own business’s accountant or bookkeeper, but being the owner of a small business, you have commended to wear several hats. Most of newer brands and manufacturers struggle for the proper management of working capital. If the code is cracked for smart management of working capital, then you will find great competitive benefit. Proper resource management will permit you to accept larger orders without damaging other business areas.

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Buying Is Just As Essential As Selling

Getting trapped with materials and inventory that one doesn’t require is not fun actually. Modest projections, proper planning, and strong negotiations should works together while the management of inventory and raw materials. Limit the inventory which is not going good by following conservative approach towards the required materials and goods one need keep in hand. Small business owners always make sure that they have sufficient cash for not just starting business but also keep it going.

Also, you can also cover your business requirement with the help of personal funds by potentially harming your wallet. They constantly look for new and advanced methods for growing his start up business and therefore they don’t look towards working capital loan. The most efficient method for growing his business successfully as well as generating capital is by securing working capital along with loan or line of credit. Through this method growing your working capital will definitely secure your small business venture during the sluggish months, making sure that you might cover up your operating cost of everyday like receivables, payables, and payroll.

Additionally, in unavoidable circumstances, it will help in mitigating your cash reserves for doing business expenditure.  The requirement of available financing solutions for covering immediate and short-term business needs is known as working capital. For determining available working capital just sum up your bank money along with your cash customers owe you plus your inventory value and subtract this sum from the money you owe to suppliers as well as employees.  You must borrow the required amount for the right purpose what you have. Banks loans are the traditional assumption as they don’t offer loan for small businesses.

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 But the fact is that there are plenty of funding options and even if one has well-developed business as well as strong credit. Not receiving a business loan as the business venture is too small. It has been found that the total matters a lot when one applies for loan if they are too small or too big. Because in the case of business loans, size matters a lot when applying in the bank but the lenders don’t look the business size rather they prefer looking at your ability to pay back to them.

Moreover, working capital specifically for small business venture is quite tough to manage with limited personnel.  If one finds crunch then rather cutting payroll or dumping inventory, he should consider the consequences of any adjustments or changes on the other side of business venture. If one finds himself making rash business decisions in context of low working capital, one might interrupt several other business areas. Discarding inventory might slow down future sales in case getting rid of stuff which is not right as it may affect your vendor approvals which will further interrupt your business supply chain. 

About ALCOR Mergers and Acquisitions

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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The Strategic Secret of Private Equity

Private equity is a term that continues for evoking envy, admiration and fear in the hearts of CEOs of the public company. In past few years, private equity firms are pocket full of huge as well as controversial sum when one stalks behind the larger targets of acquisitions. Indeed, the private equity’s global value buyouts are larger than $1 billion according to equity firm that keep tracks on acquisitions. Despite the environment of private equity appropriate challenges amid increasing rates of interest and huge government scrutiny which can be figured to reach out to be $501 billion in the coming years.

Reputation of private equity firms is dramatically growing the significance of their funding investments has helped in boosting the market growth. And this capability for achieving huge returns is usually attributed to no. of factors such as elevated-powered incentives for operating managers and portfolio managers of private equity for businesses; the aggressive usage of debt that provides tax advantages and financing; a established focus on margin and cash flow improvement; and freedom from certain regulations with restrictive public organizations.

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But the important reason behind the growth of private equity and huge returns rates is somewhat that has obtained slight attention, possibly just because it’s quite obvious that standard practice done by firms for trading and after steering them via rapid transition in improving performance and selling them. That is the main business strategy which exemplifies an amalgamation of investment and business investment for portfolio management is at the central part of private equity’s accomplishment.

Private equity eradicates the drawbacks of debt in that and for paying down debt, it does not divert capital from the business rather it shares risk in the business along with the entrepreneur. Investors after analyzing the startup’s financial information and data can invest in such companies, getting equity in return for a percentage of future sales, revenue or profit. Syndicate funding platforms, on the other hand, add value by putting together three elements: a startup, a lead investor and backers. It means that one has more time for growing his business before he starts worrying about how he will how he will pay for it or not. 

And in case business fails totally, one doesn’t have to repay. It is fact that investors either swim or sink or alongside the business owners. You will find that they will start investing more when you are able to show how this acquisition will immediately pay off, instead of taking time to produce results. This is why you should seriously consider acquiring a business if you want your business to experience growth.

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Moreover, private equity is actually an umbrella term for huge money raised directly from recognized institutions & individuals and pooled in a fund that mostly invests in certain range of business ventures. For considerable long-term gains, attraction is the potential. They might also anticipate a certain degree of influence on how the company is running.

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. Generally the fund is placed as a limited partnership, with the investors as limited partners and a private equity firm as the general partner. Typically, private equity firms charge huge amount of money fees for taking part in partnership and be inclined to focus in a particular investment type.

About ALCOR Mergers and Acquisitions

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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Debt Financing

Many entrepreneurs think that the best and common form of raising money for their startup is equity financing. It involves the usual pitching to venture capital firms and investors for raising money in exchange for equity in company. However, Equity is not the only way of raising money for company rather debt financing can help in other cases also. Debt financing is money that has to be pay back and it can take the form of a line of credit, a merchant cash advance, a loan, or a credit card. Using loan for obtaining capital or growth funds for starting a business is referred as Debt financing. Debt financing allows businesses to get the money they require for their business without giving away equity. Provided businesses can continue with the payments of interest and pay off all they owe and will get to maintain all the remaining proceeds in the coming years.

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Sources of Debt Financing

A number of sources are there for obtaining debt financing for your business. Some of the sources are outlined below:

Private Lenders: It can come from lenders such as family members, friends, colleagues, relatives, spouses, and private donors from whom you can connect with for raising funds.

Traditional Lenders: It includes banks that may do advance financing in the various business forms such as lines of credit and secured as well as unsecured loans.

Personal Financing: One can choose this from for obtaining personal loans from traditional lending sources or can use credit cards for financing business using debt.

Modern Lenders: this type includes payday loan lenders and peer-to-peer lenders.

What to Consider Before Deciding on Debt Financiers

Below are some factors that one needs to consider before obtaining debt financing options for their business:

Amount: The more one borrows, the more he has to pay back. And if one borrows money more than what is needed, there is a possibility that you will squander it which might result to a huge debt pushing your startup business into bankruptcy.

Interest Rates: Always bear in mind that depending on the monthly payable amount, interest rates on loans is likely to go higher. This can hinder with cash flow, which in turn might stumble your business. So better try looking for debt financing offers that give favorable interest rates. Always remember that loans obtain without any security might have higher attached interest rates.

Your Options: With plenty of available debt financing sources, it is up to your best interests to choose the financing options carefully.

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Pros of Debt Financing

No Equity Giveaway: One of the best pros of debt financing for startup business is that you don’t have to give away business share equity, which in turn will keep full control over business.

No Claims on Future Proceeds: As long as you owe the debt, debt financing will only permit you to pay the agreed-upon sum. Without allotting further money to your lenders, you have to keep all of the proceeds once debt obligations are completed. The money is all yours when you pay off what you owe, even if startup business is purchased for millions of dollars.

Cons of Debt Financing

Payment obligations: Lenders expect that you pay off your debt like clockwork even in difficult times as they don’t have stake in the business.

Assumption of all losses: You are the sole responsible for the all the risks, when you are the only owner of the business. When you fail then not only you need to assume your losses, but those of lenders too, as they can sue you if you can't complete your agreement.

Moreover, debt financing has its advantages as well as disadvantages; it’s up to you whether you choose this kind of financing for your business startup will work for your requirements.

About ALCOR Mergers and Acquisitions

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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