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When Should a Company Start Raising Venture Capital?

Most entrepreneurs often feel that venture capital should be raised prior to or immediately at the onset of a business. However, this is not often the case. Venture capital, as discussed in previous articles, can be raised in several different stages. In order to finance your growing business, you can skip the steps regarding startup/seed capital and move directly into mezzanine capital. This is especially true if you business is operational, profitable, and has an extensive operating history.

 

When looking for venture capital it is often difficult to determine when and what type of capital is required. Again, the most advanced your business (and the more profitable) the easier it will be to secure an investment from a venture capital firm. In some instances, it may be appropriate to raise capital only when your business intends to undergo an aggressive expansion. This will not only ensure that you will have an easier time raising capital, but your business will also meet the growth criteria required by venture capitalists. However, this is not only the case. In regards to companies that have proprietary technology or a highly unique business model, it may be appropriate for you to being to raise venture capital prior to the onset of operations.

 

As has been a common theme throughout these articles, there is difficulty in obtaining private capital – and by having either an established business that is growing, proprietary technology, or a highly unique business plan – you will be in a much better position to acquire funding from private investment firms.

 

When determining when to raise capital, you may want to consult with your certified public accountant prior to entering this process. In our next article, we will discuss the general costs of raising capital.

 

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Raising seed capital : Discover one thing that 70% of all investors want

After the crisis, a change occurred in the hedge fund industry. Investors became more doubtful about hedge fund abilities to make money. As a result, 70% of investors are asking more transparency from the managers, according to a SEI survey.

To raise your seed capital or to convince new investors, you need to be as clear as possible about your project or your fund. Explain your competitive advantage, your overall strategy, the fee structure, the legal structure, assets under management… The quality of these explanations will be a big factor in the prospect’s mind. Be prepared to answer question about valuation methodologies, risks, returns, ranking, human resources, management.

Having a good-looking power point presentation is almost indispensable. A picture is worth a thousand words. Sometimes, really good managers can’t express their ideas clearly. By preparing a presentation you make sure a lot of complex aspects of your hedge funds will be understood instantly.

Some investors will also call you a lot to know everything about you, your staff and your hedge fund.

In order to do that you will need marketing tools like a CRM (Customer relationship management) to stay in touch with you prospects. A growing numbers of investors need time to decide if they’re interested in what you have to offer. With a software like a CRM you can send them detailed reports on a regular basis. In those reports, you can talk about what changed recently, for example if you hired a new manager. You can also explain your management philosophy.

Investors will also do some research online. As a consequence, it’s really important to have an Internet presence. A website that explains your overall strategy can help prospects decide themselves quicker.

For a successful hedge fund marketing campaign you need to be as clear as possible about your fund and you need to build trust with your investors. It’s a lot easier to achieve that with powerful marketing tools.

Raising Capital In A Down Economy

As a real estate investor looking for capital for deals it can be very challenging especially in a down economy such as the one that we find ourselves in. However, that doesn’t mean that it is going to be impossible to raise money for your real estate investing business. The key is to have the right approach and to be able to demonstrate what you have to offer for potential investors.
Many investors make the mistake of believing that no one is interested in investing in this current market. With the prices of real estate significantly below their value highs, the thought is that people are going to be hesitant to invest their money. Basing your business and investing strategies on generalizations is a good way to significantly hinder your growth.
While it is certainly true that SOME people are going to be hesitant to invest in this environment, others are very excited about the investment opportunities that are available. They are just looking for the right opportunity to take advantage of. Others would love to take advantage of alternative investing strategies, but simply don’t know what is available to them. You might be just the person that they can work with.
So how do you raise capital in a down economy? Let’s start with how NOT to raise capital. It is guaranteed that if you don’t ASK for the money that you need, you will never get the money that you need. One reason why investors don’t get the capital they are looking for is because they are afraid to ask. They assume that investors are not interested in investing with them and as such, they never take the time to find out. There is no harm in asking for money. The worst thing that can happen is the person says no. However, what if they say yes? Imagine how easier your investing efforts would be if you have cash at your disposal to invest?
Now that you know how not to raise capital let’s review some strategies that you can use to raise capital in a down economy.
One way that you can raise money in a down economy is to target high net worth individuals who may have been burned by other methods of investing. For example, there are a number of people who have a lot of money tied to the stock market. For instance, if you invested 0,000 in the S&P 500 index in January of 1999 and calculated how much money you would have by December of 2009, adjusted for inflation, you would only have ,480 after 10 years of investing. That is a terrible rate of return and there are a lot of people who are experiencing those types of returns, if not worse.
By targeting these people, they often make great candidates for private investor partners to provide the capital that you need for your real estate investing business. You could easily provide them with a better return on the first deal that they did with you then what they are likely getting in the stock market. The problem is, they simply don’t know about your program.
Another group that you can target is high income professionals, such as doctors, attorneys, certain types of accountants, executives and business owners. These are people that make a great income but need a place to invest that money. The places that they are likely investing that money (i.e. the stock market & their own personal residence) has likely lost money over the last several years.
Because of the returns that are available as a real estate investor, you can show them how they can partner up with you, get much better returns than what they are getting right now and even potentially make back some of the money they have lost. They are likely concerned about the economy right now because the assets that they are saving up for retirement and their children’s education have likely diminished significantly. Investing with you is a potential solution.

Where do you find the types of people that fall into these categories? It’s not like everyone walks around with a sign on their forehead that says “I have money to invest in real estate” or “I don’t have money to invest in real estate.” The key is to tap into your network and present your program to people that are already in your network. They may be the person you are looking for. They may not be the person themselves but they might be able to lead you to the right person. You won’t know until you present the program to them.
That means you should have an idea of exactly how much money you will need to raise. You can calculate this number based on how much money you know you will need in order to acquire the types of properties that you are looking to buy and to put in the work necessary to make the property profitable.
For example, let’s say you encounter a 3 bedroom 2 bathroom home for ,000. The property has about ,000 worth of work that it needs in order to get it back to market value. The market value in the area for these types of homes is 0,000. You would need to have at least ,000 cash in order to purchase this property. You will actually need a little more than that to cover holding costs, but let’s forget about that for now.
With the ,000 cash, you can buy the house all cash. You won’t have any mortgage on the property. You can invest the cash required to do the work to fix it up to market condition. You can then list the house at the market value, sell it and make a profit. The profit is what you will use to pay off your investor and any money that you have left over is profit for you. This is a great way to invest because you have other people putting up all the money, yet you are able to generate a profit. With ,000 profit, you think you could give your private investor partners a much better return than what they are getting in the stock market? Consider this, a 10% return on ,000 is only ,000 and if you are in and out of the deal in 6 months, that is actually the equivalent of a 20% annual return.
Once you know how much money you need, the next step is to find people that have this type of money available to invest. A person doesn’t have to be rich in order to have ,000 to invest. There are a lot of older middle class professionals that have multiple six figures in their retirement accounts to invest. Suppose you have a single person with no kids that takes an early withdrawal penalty to take out the ,000 from their 401K plan. They would have to pay approximately ,000 in taxes plus ,000 in a penalty, for a total of ,000. Let’s say you agree to give them half of your profit (which is a lot BTW), in this case ,000.
Within a 6 month time frame of investing with you, their return would be enough to cover all of the money that they had to pay in taxes, the early withdrawal penalty, plus an extra ,000 profit. The profit alone is a 5.5% return over a 6 month time frame, which is significantly greater than what their return would have likely been in a 401K plan over the last 10 years!
The best way to find these people is to start with people that you already know. Sit down with your family members as well as your friends and explain to them what you are doing. Create a nice presentation that highlights the key points to your program, such as how much money you need, what the money would be used for, how their investment would be secured by real estate, etc. Show them the type of returns that are possible and see if they are interested.
Will you have some friends and family members that won’t be interested? Of course you will. However, there is a good chance that you will have some that would be interested. The reason why is because your friends and family members, in most cases, trust you more than they trust a complete stranger. They are already giving their money over to a complete stranger in the form of these mutual funds that they are investing in. They are clearly not happy with their returns. With a property that they know is worth at least the amount of cash that they have, it will be tough for them to lose money.

Besides friends and family, there are a number of other contacts in your associate circle that you can approach regarding partnering up with you in your real estate investing business. A great group to consider is other investors that you work with. If you currently have investors that you flip properties to, maybe they might be interested in partnering with you on a deal.
Think about groups of associates that you have where they are likely to have money. For example, if you have gone to real estate seminars, personal development seminars and other types of retreats, this is a great group of people to approach. People that tend to invest in these types of events usually have disposable income; otherwise they wouldn’t be attending the event to begin with. Contacts that you meet while on vacation are another good group as well.
As you go through your contacts and identify people to approach, keep in mind that if the person turns out not to be interested, they could still potentially help you by referring you to their contacts. There are dozens, if not hundreds of people that they know that you don’t. One of those contacts could be the perfect partner for you.
One of the most important steps towards being able to have an investor decide to do business with you is providing documentation to make the potential private investor partner comfortable doing business with you. While there is no rule set in stone that says that you have to have completed a deal successfully, the fact is, private lenders are going to feel more comfortable dealing with investors who have done these types of transactions before. If you don’t have any money to do these types of deals yourself and you are having trouble with convincing a private lender to work with you, perhaps you may want to get a few deals under your belt by wholesaling the properties to other investors.
If you have deals that you have done before, it is a good idea to document some of these deals and highlight them when you are doing your presentation. Even if you didn’t use private lenders for the deals, you can provide examples of what a private lender could have made with you if you would have used one on the deal. This way they know that you have experience and a track record and they will feel more comfortable doing business with you.
Once you find a partner that is interested, the next step is to agree to the terms of the deal and create the necessary structure to protect both parties. One of the most common ways compensation is done is by negotiating an agreed upon return on the partner’s money after a set period of time. For example, you might agree to give the partner back their full investment, plus an additional 10% after 6 months. In the case of a 0,000 investment, you would give the partner 0,000 when you repay him or her.
To provide the best type of protection for both you and the partner, you should purchase the properties under some type of corporate entity. In addition, you should create a written document that outlines fully all of the terms and conditions of the partnership. Don’t leave anything to memory! Document everything so that if there is ever a question or misunderstanding you can refer to the documentation.
Also, keep in mind that there are legal ramifications to arranging these types of deals so a competent attorney should be consulted. The other reason why you will want to consult with an attorney is because you want to make sure that you are not in violation of any securities laws. Securities laws are very serious and violations can result in very stiff fines and penalties. You may also want to speak to a tax professional to fully understand the tax ramifications from such a relationship.

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Capital Fund Raising

 

A capital fund raising campaign is a time-limited endeavor by an organization to raise important funds for the completion of a project. Often money is required to fund an acquisition, renovate a building, complete some construction work or even raise an endowment for some future project. Sometimes, capital fund raising is used to finance some extraordinary expenditure like the purchase of costly pieces of equipment.

 

Capital fund raising campaigns require a lot of planning if they are to turn into a huge success. It can yield huge returns if every phase of the fund raising campaign is managed in an orderly manner. Fund raising techniques have been changing over the years and new, innovative techniques are coming into existence every year. However, the basic rules should form the wide framework within which you plan your strategies.

 

To raise funds successfully, it is necessary to determine the feasibility and the process of fund raising at the very beginning. The usual practice is to employ an outside company that specializes in capital fund raising campaigns. In most cases, capital campaigns are phased and timely, with a clear beginning and an end. However, these campaigns may span several years and employ various means of raising money, including direct solicitation and online campaigns.

 

Most fund raising companies kick-start the entire process by calling a meeting of the leadership of the organization. They will then pitch the cause to potential donors and interview them. They will also follow through until all pledges are met.

 

Generally, money comes from corporations, local and state governments and foundations. Companies generally seek both episodic as well as ongoing funding, and spread out their fund raising activities between the two. A number of activities like writing texts, development of graphic material, enlisting support of the media, personal contact with donors and follow through are necessary for successful fundraising.

 

Raising fund money is serious business and not an easy one. However, clear goals can make fundraising successful. Fund raising activities are a necessary part of growth and development. Setting financial goals is perhaps the most important part of capital fund raising. The funds raised have to be sufficient enough for the projected expenses. Even so, goals need to be realistic. Generally, different strategies are used to reach the small numbers of donors who make large contributions. A different kind of strategy is used to reach the larger number of persons who make smaller donations. Employing a multi-faceted approach is the best way to mount a major fund raising campaign.

 

 

Capital Fund Raising – At Sovereign Group, our main business has been the setting up and management of onshore and offshore companies and trusts to assist with tax planning and asset protection including asset management services & protection, capital fund raising, specialized tax advice, credit cards and others.

 

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Raising Muslim Children

Children are gifts from Allah to every parent and can be considered as a pearl that is given to someone to be guarded and taken after. Hence, the person must take good care of it so that its originality conserved as when the pearl is given to him/ her. Children can also be considered as property that can be use as capital for a business, hence the property must be use wisely so that it can multiply and bring profits.

Children must be raise or taken care by the way of Allah. We must always seek guidance so that we don’t make mistakes and we must also threat our children properly, with softness and not just according to our will. Most Muslim today take less effort in seeking guidance and knowledge as we think or assume that we know how to raise our babies, but actually the only knowledge we know about raising baby is just from the experience how we were raised by our parents. Most of us would just take the methods used by our parents that we agree and probably change some of it that we assume will become better. Most of us think that we know how to threat our children and don’t want others to interfere. This kind of thinking is what makes Muslim children grows to someone that we are unsure of as the methods that we are using is not recognize and are only based on our assumption. There are many guides that we can follow which can be found in the Quran, books, and many other sources.

From the beginning, we should teach our child about Allah and that we are only slaves to Allah. Plan our child development by preparing what he or she would learn during their age. Get them used to good deeds from early age and always give them guidance in their activity.

Also take note that one of the best learning method is to teach by example. We as parents should first have good behaviors ourselves in order to shape our children’s behavior as children can easily follow habits that are practice by parents. Make sure that we don’t show bad examples such as smoking in front of them, driving wildly, throwing rubbish and etc.

For proper growth, enrich our children’s spiritual, mental and physical aspects. These three factors must be balance and they should never be focused on only one of the factors because the imbalance can jeopardize another factor among the three. If education is only focused on mentality for example, the child will grow up not knowing Allah or weak in terms of physical.

Our children is our responsibility, we are the ones that should care most for them and not their teachers, nanny or grandparents. Caring isn’t just being nice or pampering the baby but we must also know what to do, what is good for them and what isn’t. Assuming is valid but it is seldom true, look for methods that have facts and don’t just ask your feeling for ‘what you want to do’.

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Raising Capital in Today’s Economy

Some companies believe that helping clients develop business plans and raise capital from “angel” investors, corporate entities and venture capitalists requires a tremendous amount of work, but it can be done. They will happily charge you for all the “hard work” that it is going to take. Others of us believe that it just takes know how and tenacity. There are lots of secrets to raising capital out there, but most companies won’t share them with small businesses that are trying go raise capital. Why? I really don’t know. Perhaps they are afraid people will see it is easier to raise money than consultant companies want business owners to know about. Perhaps they are stingy with information in general. Here are some quick tips about raising capital that you can use.

A rule to consider for raising capital is: You will find an “angel” when you least expect to, many investors are very picky about the type of the investing they will get into, they are usually looking for the least risk and greatest gain.

Venture capitalists can be challenging, remember, they are highly skilled at the entire process, in most cases they’ve done it hundreds of times before. So, you are in their arena and you better do your homework properly (market size, revenue projections, cost of sales, marketing plan) and/or consult with a consultant, attorney or “angel investor” to give you guidance.

With venture capitalists or corporate investors, don’t be so desperate for capital that you agree to turn over the reins of the company if you don’t meet specific performance milestones based on a first or second round of funding. There are too many variables in the marketplace for you to control.

In today’s economy there are many projects looking for funding, whether looking for funding for yourself or client, remember there are hundreds of others with a similar situation, set yourself apart from the others.

You must be absolutely committed to the project, going into the “angel” investor or “VC”, your passion for the project has to shine through. Believe in the project, so that the “angel” investor or “VC” can believe in his investment. Remember, tenacity is one of the keys. Make your decisions and follow through with them. I found some great resources at Raising Capital Secrets that have been helping me fund my latest business ventures. Wherever you find your resources on how to raise capital for your business, good luck, and keep working on it.