Showing posts with label Fund Raising. Show all posts
Showing posts with label Fund Raising. Show all posts

Sunday, 25 February 2018

INVESTMENT BANKERS ARE NOT VENTURE CAPITALISTS


There is a rather silly notion that–more often than not–stems from ignorance related to private, corporate investments.
That is, nearly all investment funds (private equity, venture capital, family office) and investment bankers fall within the same bucket. News flash: Investment bankers are not venture capitalists OR private equity investors.
Very few middle-market investment banks invest using their own funds. Very few have their own investment vehicles and, when they do, they typically are less inclined toward early-stage venture capital deals. Most private equity funds are interested in risk-sheltered, boring deals in steady-state sectors. Valuations, business models, and investor types are all differentiating factors between investment bankers and venture capitalists. Here we will discuss some of these in more detail.

BUSINESS VALUATIONS

There is a difference between a venture capital valuation and a valuation for M&A. One often bases assumption on forward-looking potential, while the other uses historical performance. VCs use pre and post-money as the basis for the “valuation” while the other looks at some multiple of the historical cash-flows, typically based on industry comparables. Both play the diversification game very differently and therefore treat business valuations very differently as well.
Venture capitalists want the lowest valuation with the lowest amount of capital infused for the associated risk–except in cases when they need to place funds and they have the opportunity to feed a unicorn.
Investment bankers are apt to push for the greatest amount of capital input and the highest valuations possible. Their commissions move in-step with both of those metrics. In fact, when investment bankers do work with venture capitalists on behalf of a client, they are typically at odds with them. There are some venture capital firms that refuse to pay the fees of intermediaries. It’s a picky mentality, that is not exclusively the curse of venture capitalists, but had among private equity firms as well.

ADVISING IS NOT INVESTING

In the valuation differences discussion above, we are speaking as though the investment bank itself directly invests in deals. While many investment banks have their own investing funds, most in the middle-market investment banking firms do not directly invest. They are typically the connecting link between buyers/investors and the issuers/sellers. They advise clients on the nuances of capital transactions (e.g. buy-side M&A, sell-side M&A and debt/equity capital infusions). They are not fiduciaries of investor funds. They do not have a investment “thesis” or “mandate.” Most are brokers and intermediaries, advising clients on their own transaction(s) with capital sources, they are not investors themselves.
Bulge-bracket banks differ here, but the general advise or invest rule holds true for most in the mid-market.
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APPLYING FILTERS

Fewer investment bankers work with startups than do venture capitalists. Most bankers like to see substantial revenues (again, the bigger, the better). Why? This is how investment bankers ensure they are able to truly take both front-end and back-end fees for the work they do. That’s not to say investment bankers are more picky than venture capitalists. Both rightly apply stringent filters on potential deals. They simply have different filters to keep out the riff-raff. As you might imagine, we receive an inordinate number of capital raise requests. So many, in fact, that I have automation email chains set up using appropriate tags as the trigger in our marketing automation and CRM system. The tag I regularly use is #RaiseCapital.

Both investment bankers and venture capitalists will put off phone calls, NDAs and “presentations” from companies until they know whether or not there is real meat on the bone or potential proof in the pudding. Such filters should be expected. If a company is unwilling to jump through the hoops, then they become one of the many self-filtered deals.

WHAT WE ARE AND WHAT WE ARE NOT

Investment bankers are advisors, intermediaries, and brokers. They are rarely active direct investors, venture capitalists, private equity investors. If an investment bank invests directly, they typical do so through investment vehicles run by separate teams than those who manage the processes of their capital transactions.
The perfect example of “what not to do” comes from a request we had this week. The message included name, email, phone and location with the following text: “Need a loan.”
In the regulated financial services world, investment bankers are required to following “Know Your Customer” or KYC rules, so as not to provide investing advice to products unsuited for various investor types. While I would not assume the same scrutiny would be applied to company issuers looking to transact in some way, it would be very helpful if issuers applied some form of “Know Your Investor” principals to their outreach.
The more you know, the less you will look foolish and the more likely you will be to get a deal done with the right investor group. In fact, that’s the reason most companies hire an investment banker in the first place.

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 advisoryJoint Venture AdvisoryPrivate EquityDebt 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.  


www.alcormna.com

Wednesday, 20 December 2017

Fundraising for Women-Run Venture Capital Funds Accelerates



Despite remaining underrepresented in the industry, women-owned funds are securing more capital and making more deals in 2017

Women make up an average of 21% of staff at venture capital funds. This proportion falls to 11% of senior staff, and just 6% of board members at venture capital firms. However, women-owned* venture capital vehicles have seen fundraising reach new heights in 2017 YTD, as 13 funds have secured $2.4bn as of September. This is up from the $1.8bn raised by 25 women-owned funds in all of 2016, and follows a consistent trend of growing activity over the past five years. Looking ahead, there are 58 further women-owned funds in market, seeking a combined $6bn from
investors – 4% of total capital sought by the industry. Women-owned funds are also increasingly active deal makers, being involved with 510 financings in 2017 so far, worth a total of $6.4bn. The largest proportions of these were in software and internet companies, mirroring overall industry trends.


Key Women in Venture Capital Facts:

• Women make up an average of 21% of venture capital employees. At a senior level, women constitute 11% of staff, and occupy 6% of venture capital board seats.

• Women-owned venture capital funds have seen a sustained upswing in annual fundraising. Twelve women-owned funds raised $0.8bn in 2013. As of October 2017, though, 13 women-owned vehicles have secured $2.4bn.

• There are 58 women-owned venture capital funds in market, seeking a combined $6bn. The largest of these is Baidu Capital, which is targeting $2.95bn.

• In the first three quarters of 2017, women-owned funds have been involved with 510 deals, worth a total of $6.4bn. Of these, 25% were for software companies, and 22% were for internet firms.

• On a partner level, female partners have led 307 deals in 2017 so far, worth a combined $5.1bn. This is a record for both the number and value of women-led deals, and accounts for 9% of total deal activity this year.

• Funds of funds are the most active investors in women-owned funds, providing 29% of funding since 2000. Public pension funds (22%) and foundations (13%) are also significant backers.

• Almost three-quarters (74%) of funding for women-owned venture capital funds comes from North America-based investors. European and Asian investors account for 20% and 5% of commitments, respectively


The venture capital industry is undergoing a storm of controversy over the representation and treatment of women both as founders and as venture capitalists. Initiatives to promote gender equality in the industry have included high profile decency pledges and women-focused mentorship and empowerment programs. Women only represent one in five staff at venture capital firms, and one in ten senior staff, highlighting the uncommon nature of these programs, and the structural and long-term challenges they face. However, we may feel encouraged by the fact that women-owned venture capital funds have steadily become more common and more active, raising more money in the first three quarters of 2017 than ever before as well as being involved in over 500 financing rounds. At the same time, female partners at firms have already marked a record year for both the number of deals they have led, and the total size of those deals. While these developments are welcome,
it should not dilute the fact that women undoubtedly still face numerous challenges in the venture capital industry.”


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial 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.  


                                                                     
                                                          

www.alcormna.com

Thursday, 2 November 2017

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.


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.


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.



Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial AdvisoryPrivate 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.  




Thursday, 12 October 2017

Use of Debt Financing


Proper use of debt finance is useful to your business in an exceeding range of various ways that. First, debt finance nearly always prices considerably but equity finance (the exception being once the market is approaching bankruptcy or high levels of debt). If you get a loan with the bank, it will value your business 5% to 7% in annual interest expense. Imagine what if the value to use equity for an equivalent amount!

If your company’s book equity were to trade on Wall Street in the week, what would the value be? One might see the evaluation and in a minimum thirty third come back on equity merely to urge interest of investors, coupled with consumers. Equity finance is exceptionally dearly-won as a result of the chance of equity possession is therefore high. Debt finance, on the opposite hand, is way less costly and far a lot of promptly obtainable. The second good thing about the correct use of debt finance is that the potential for increased come back on assets (ROA). As an example, assume that a business holds massive amounts of money balances rather than employing a line of credit to help with the finance of current assets like assets and inventory. The money balances area unit is earning interest financial gain at a rate of a hundred and twenty-fifth to twenty annually. If the corporate might borrow at a rate that, after tax, is the comeback of the supported plus, then it would be prudent to try and do, therefore. Obtaining disembarrasses or low come back money and work low-interest debt can raise the ROA.


One massive downside with debt finance happens once business house owners begin mistreatment short finance for long-run assets or long-run investment for short, monetary goals. Term debt finance ought to be used for future plus finance and small debt, like lines of credit, ought to solely be used for assets financed. Total annual expense (relative to revenues) ought to never exceed net operational, financial gain margin. This is often negative leverage and should be avoided at any respect prices.
Few corporations will financially operate while not the utilization of debt finance and even people who turn out enough income to avoid the usage of debt ought to seriously rethink that alternative. Debt finance merely is so much cheaper than equity finance. A careful monetary balance is crucial however outright rejection of debt attributable to what the misuse of debt will cause is shortsighted and damaging to the corporate. A further conception for debt management uses a plan referred to as the loan constant. We tend to cowl the loan conception in-depth here, as well as a way to calculate it for all of your investments.

The higher the loan is constant, more no. of disadvantage to the credit. If you wished to pay off loan balances and didn’t recognize which of them to pay initial, you will be able to use the loan constant to work out wherever to begin. Merely begin paying the best mortgage constant worth loans initial, performing from highest to lowest. Loan constants typically increase as time goes on instead of decrease from the first calculation.


Moreover, a business concern unit which will be a public organization’s portfolio for a brief amount and is acting adequately, if not hugely, typically doesn't get attention priority payment from senior management. to boot, as a result of every investment created through personal equity funding in massive business are going to be liquidated at intervals the fund life, it's seemingly to calculate money returns on many capital investments accurately. That creates it quite easy to make inducements for finance managers moreover as for the executives running the massive businesses that are connected on to money worth that is received by investors that are funding the business. During a public organization, there's no case with company managers and not even with business unit managers.

Furthermore, for putting in place your startup business venture, one thing new and inventive may be foreign by your brain. It should be such as you need to launch a replacement style of business or to start out your career. Regardless of the situation is, cash controls everywhere the system because it is that the backbone to keep your startup business grow and maintaining pace within the world competitive market. Hence, capital will think about because the main fuel for any business. Fundraising in the main depends on the sort moreover because the nature of business one goes to line up.

Use your debt capacity wisely!


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial 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.  


                                                                       
                                                                 
 http://www.alcormna.com

Wednesday, 27 September 2017

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.


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.


 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. 


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial 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.  



Thursday, 21 September 2017

Funding Through Equity or Debt Financing


There are numerous funding alternatives to consider for an entrepreneur; and it is essential to understand how to fund your startup business venture that might have main consequences. As your small business venture will require an extra working capital for executing development project and you must either seek funding from investors or rather take out a business loan.

Which Is The Better Option – Debt Or Equity?

Debt financing involves borrowing capital from a lender which you have to pay back with the interest to the person from whom it has been borrowed. And if in case, you have taken loan, then that means you have financed something along with debt.  Supported with the business loan, you are controlling that extra working capital gets spent. In several cases, few lenders some impose few restrictions, what you are actually financing is totally up to you. Debt financing can be considered flexible. There are various business loan type based on how that much amount of money one will get and how much time it will take to do repayments. Meanwhile, based on your financials and credit score, it can be quite tough for you to qualify for the type of loan you want. And in case, if you are not able to repay the loan, then the lender might seize all the assets of your business.


Equity financing involves trading your business ownership to venture capitalist or angel investors, in return for their working capital. Especially, equity is quite essential for several industries and startup businesses such as technology start-ups and organizations with international aspirations. You do not have to repay interest on working capital raised by you, so there is no requirement for putting your startup business profit benefits into repaying debt. This means that you have more funds available for growing your startup business. It's also in need to understand the rates that are associated with while choosing other source of fund lender. Entrepreneurs mainly focus on upcoming potential rather than present state of their manufactured goods, while investors focus on the capital required for ensuring future productivity. Therefore, startup business owners are similar to overestimate their organization while certain investors are mainly due to undervalue it. Startup valuation is quite complex than evaluating your no. to those investors having potential growth.


Running the company smoothly having all the control and as well as lean shows the investor you have sound judgment and worthy of investment. Angel investors find interest in the next generation ideas and willingly fund startup ideas they find worth. They usually focus on technology startups. 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. For the majority of entrepreneurs, maintaining and building local customer base is the first step towards success. Once this goal is achieved, few business owners think that they are ready for the next step i.e. expanding globally. It is an impressive feat to become a global company, as not every business that sets out to do that achieves the goal. In order to convert your business successfully from domestic to international, one needs a new set of factors to consider.

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 advisoryJoint Venture AdvisoryFinancial 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.  



                                                                       
                                                                http://www.alcormna.com

Wednesday, 13 September 2017

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.


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.


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.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial 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.  


                                                                       
                                                                http://www.alcormna.com