Capital Raising Services

Posts Tagged ‘Venture’

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.

 

More Capital Raising Process Articles

How to Raise Venture Capital for Your Business

For a new business with little or no start up funds, the thought of how to raise venture capital can be daunting. It is not impossible, however. There is a multitude of venture capitalists and investors waiting to help you if you know what to do and where to look. There are several things an investor will look for in order to do business with you:

A Business Plan – this needs to be a detailed plan outlining your product or service, your market share, income and expense statements, organization charts, and mission statements. Are you going to have a physical presence, be completely online or a combination of both? You must have marketing strategies for each of these scenarios.

Experience and skills – an investor will want to know what you are bringing to the partnership. Have you run a business in the past? Do you have unique skills and talents? Don’t be afraid of appearing conceited; the more you list, the better, as long as you can back them up with proof.

Commitment – are you treating this as a hobby, or are you truly committed to succeeding and seeing a profit?

An Exit Strategy – do you have a strategy in place for your investor to exit your business? For the most part, investors and venture capitalists will want out of your business once it becomes successful, or they have received a return on their initial investment.

Depending on the nature of your business, and the amount of capital needed, venture capitalists will require all of the above in order to consider you investment worthy. Some investors only invest in high tech businesses, while others invest in areas where they themselves have expertise. The process of arranging capital can be long and rigorous. Most venture capitalists have strict criteria and guidelines when considering investments and will want a say in major business decisions.

Do your research to find the right type of investor for your business. It doesn’t matter what hemisphere you live in, there is an investor willing to help you, provided you have the criteria they are looking for.

In China High Potential and Quality Service Venture Capital

 
Venture capital is a type of private equity capital typically provided to immature, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. Venture capital investments are generally made as cash in exchange for shares in the invested company. Venture capital typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms.

Dynasty Resources is your Gateway to business in China. Through partnerships with top companies, each specializing in a unique area of China business, Dynasty provides quality services that help you enter the most exciting market on earth. Dynasty’s venture capital and private equity partners specialize in China investments, everything from tech startups to joint ventures with State Owned Enterprises. But despite our best efforts and intentions and goals, that doesn’t mean each of us is able to figure out the why, where, who, when, and most frequently the what of how to get rich. Not all of us can drive every vehicle capable of shuttling them to success equally or as quickly as they might another vehicle. That’s why I wrote this article. Real estate investing is my passion. Real estate investing can build and keep wealth like nothing else. But I won’t claim it’s the best vehicle to build wealth easily. In fact, I’m not sure it is!

This article will help some of you see the types of actions and scenarios likely to take someone reading about how to get rich and propel them into a future full of success and sharing with others how to get rich— just by taking each of these vehicles for a mental test drive.

Venture capital is most attractive for new companies with limited operating history that are too small to raise capital in the public markets and are too immature to secure a bank loan or complete a debt offering. Dynasty matches you with experienced investors with a proven track and a common mission: to create entrepreneurial returns on capital by investing in and helping build companies that have scalable business opportunities in the global Chinese economy.

Dynasty’s China venture capital partners invest in many industries, including technology, real estate and energy efficiency, among others. Please call for a free consultation. Tens of billions dollars of Foreign Direct Investment are poured into China every year; investors are betting on China because they know it’s the most lucrative market in the world. Making the right investment, however, requires the guidance of professionals who understand the Chinese mindset and the local business climate.

 

 

Find More Capital Raising Websites Articles

New Report “venture Capital In The Energy Industry Report” Added In Visionshopsters

Venture capital (VC) is an important financial tool for innovative start-ups in many industries. In recent years, increasing amounts of venture capital have been invested in new energy technologies via newly emerging, dedicated industry VC funds. Although government financing continues to provide the lion’s share of investment dollars in new and emerging energy technologies, industry experts are starting to see more and more investment activity from private sources. Venture capitalists have invested in everything from distributed generation to online energy exchanges, and many utilities are joining them to cultivate corporate earnings growth.

Venture investing in energy-based technologies and projects began about seven years ago. Unlike government financing, which focuses on developing technologies for eventual application, venture dollars are invested for purposes of financial return. Venture capital is not R&D funding; it is really business expansion capital.

Since the 1960s, venture capitalists have invested in young, rapidly growing companies through purchase of equity securities to help develop new products and services. Venture capitalists often take high risks in anticipation of high rewards.

As deregulation and energy industry restructuring have opened up prospects for high-growth technology companies in the utility industry, private partnerships and closely-held corporations funded by other corporations, pension funds, endowment funds, foundations, and other investors have begun to take notice and establish funds focused exclusively on technology companies servicing the utility industry. Today, a small number of such firms devote themselves solely to energy investments.

Utility companies, as well, see the opportunities and recognize the imperatives. Facing competition, tighter margins, and lower revenues in their traditional businesses, they realize that they must find new ways to raise income and must look to new technologies to become more efficient. Many conventional utility companies have set up venture arms to finance high-growth companies such as Internet exchanges for oil, gas, and power; utility bill presentment and consolidation; and other business-to-business e-commerce services. In addition to the Internet, many dollars are being poured into companies that develop alternative energy sources, particularly fuel cells and other types of distributed generation.

Compared to investment in the Internet, venture capital investment in energy technologies is modest. However, in the past five years, a noticeable surge in venture funding has occurred.

This report on Venture Capital in the Energy Industry focuses specifically on this changing investment landscape and the market scenario for energy companies looking to obtain funding. From exploring the very basics of the concept of venture capital to understanding the important role VC plays in the energy industry, this report offers a comprehensive overview of the topic. It describes investment options for VCs, options emerging in sustainable energy, factors influencing energy VC returns, strategies of VCs investing in the energy industry, and a comprehensive description and portfolio analysis of the leading venture capital firms investing in energy.

To know more about this report & to buy a copy please visit :
http://www.visionshopsters.com/product/1079/Venture-Capital-in-the-Energy-Industry-Report.html

Contact us:

Visionshopsters
Ph : 91-22-40583000
Emailid: marketing@visionshopsters.com
Website : www.visionshopsters.com

More Capital Raising Websites Articles

Hypo Venture Capital : When Investing In an IPO – Reduce the Risk

 

 

Hypo Venture Capital is a market leader in Financial Services. Here is a guide to Initial Public Offerings (IPO’s) designed to take the jargon and fear out of the myth that IPO’s are higher risk than ordinary investments.

 

Here at Hypo Venture Capital we are committed to offering our clients access to the latest and broadest range of financial services and products on the market. We know that choosing the right strategy, the right investment and the right product is no easy task in this day and age! Whether its advice, investments or financial planning we are here to answer all your questions and facilitate all your financial needs.

 

IPOs or Initial Public Offers are means by which a company can raise debt free capital through sharing the ownership and profits. There have been many companies opting for the IPO route over the last two decades. There have also been many big success stories with people making decent profits through these investment tools. However, there are always some items to consider when investing in an IPO that can reduce the risk in this.

 

IPO Basics

As the company starts growing, there is a time when it needs huge capital to take it to the next level of growth. Some companies decide to raise debt to get this capital; others opt for profit sharing without adding to the debt. The second option is the IPO route. In effect, when you invest in an IPO your are opting for part of its profits and losses too! So you need to be very selective on which companies you want invest in.

 

Studying the Company

A good starting point for your IPO analysis is to look at the IPO prospectus, and the financial reports of the company for as many years as possible. One thing that every company must publish is its total debt and total asset value. As long as the asset value is more than the debt, you know that enterprise can pay off its debts so it would survive. Also look at the difference in the assets value and debt which in effect is like the company value. Check what is the effective company value based on the IPO price and number of shares. If the IPO price is less than this value you are in for good profits on listing.

Besides value, another good indicator is the company growth seen in the profits it has made over the past few years. Sometimes the enterprise is new so its current value is less, but a strong growth pattern would be that its value is going to increase in future so it is a good longer term investment.

 

Third important thing to look at is whether the company is stuck in some legal tangles. Typically, if the verdict goes against it, it would affect its finances and more importantly the stock price in the market. You could lose lot of money, in that case. So study these aspects well before investing.

 

Lastly, analyze its market standing among the peers. If you use its products, you know it is a good company and you can invest with lesser risk. But if it is an unheard commodity, you need to be cautious.

 

Besides these points, other items that could affect the IPO price on listing are market sentiments, the economic outlook, general industry news, etc. These are so dynamic that they cannot be used a guidelines, and you need to go with the market flow.

 

In short, investing in an IPO in can be risky, but with careful analysis you can reduce the risk. For this there are some items to consider when investing in an IPO. As long as you do your homework, the risks are limited.

About the Author:

 

Stephen Holmes is a Senior Vice President at Hypo Venture Capital, with experience in the Financial Services industry spanning over 25ys and 3 Continents. Stephen currently directs the Portfolio Risk Management Group after moving from the Equity Derivatives Research Group 3yrs ago. He has a PhD in Experimental Particle Physics and has been working in the alternative investment industry since 1992. His interests include classical music, reading and he often is a guest speaker at corporate functions with a focus on ‘Technology in Society’.

 

Want to know more?

Hypo Venture Capital is an independent investment advisory firm which focuses on global equities and options markets. Our analytical tools, screening techniques, rigorous research methods and committed staff provide solid information to help our clients make the best possible investment decisions. All views, comments, statements and opinions are of the authors. For more information go to www.hypovc.com

 

 

Starting a new venture

INTRODUCTION

There are many alternatives of starting of starting businesses. One can start up a new business which was none existent before, one can buy a new existing business or one can buy a franchise.

In our case, Mr. Sorefoot is starting a new business. Starting a new business gives one an opportunity for people to realize their dreams, they also have the freedom to select the equipments, location, products and services, employees, avoid undesirable policies and procedures, avoid many legal commitments and requirements. He will be his own boss have freedom to follow any path of business and he cannot be fired.

ADVICE:

I would advice Mr. Sorefoot to open the business.

This is because in reference to his business plan, he has highlighted all the essential areas required in a business plan.

He has given an executive summary which give highlight to all his key areas and this is very exhaustive.

In his business description, he has describes the business as sole proprietorship, this kind of business comes along with many advantages and challenges few. He also has expertise skills from his wife who was a KPMG accountant which combines well with the skills of Sorefoot who was a salesman. This will give his business a competitive edge over his competitor like the Tafia sports and the Uphill sports who don’t have qualified personnel to serve their businesses of sports wear.

In respect to the market, his target is the general public including the school children, because he opens daily unlike the market traders who open on market days unlike some of his competitors in the market. There is also advantage from the fact that Mr. Sorefoot is an ex-rugby player who has strong links with the local sports club and his wife is a chairperson of the local youth group and a member of PTA of an infant school, all this is likely to have a positive impact to his sales since as they have a good relationship with them. His business has a competitive advantage over his rivals because he can access the quality wear unlike the market traders who sell poor quality products. His business is located at a secondary prime area there fore he can access a good share of the market unlike the Uphill traders and the market traders who are poorly located. He will have a competitive advantage over Tafia traders who have low range of products.

Since Mr. Sorefoot has two plasma screens, he also plans to have promotion to schools and clubs, his strategy on the giving discount , holding evening display as well as the limited advertising on the local paper is promote his business sale because there will be increased customer awareness of his products this is likely to improve sales.

From the information given in the case study, the kind of market is perfect competition which offers free and fair competition in the market, it’s the forces of demand which set the equilibrium prices, therefore the business is likely to do well since there is free entry in and out of the market, meaning that there are no barriers of entry as in the monopoly.

From the projected financial analysis, Mr. Sorefoot firm is likely to do well, this is because his major source of capital is a loan bank, the pay back period is long enough to allow him expand his firm. He also have some saving in his account which he shares with his wife will help him to sustain his business in times of hard ship.

He should carry on with the business because he has the confidence and the self drive, more so he has set his objective, which is to make profits. He also considered his technical know how in sales and his wife was an accountant. Combining all that in addition to hiring a qualified employee is going to take his job to higher height.

Mr. Sorefoot has the knowledge of good sports wear since he was a rugby player, this is likely to satisfy his customers with good quality of products, more so he gets his products from known brands such as Nike, Adidas, Reebok and Canterbury. Since most of the people spend their leisure in sporting activities, this will match his job objective.

Recommendations to Mr. Sorefoot before starting his business [bounce sports]

Since he has analyzed his strength and weaknesses, he should capitalize on the strength while trying to counter the weaknesses. He should look for primary prime location; plough his profit so that he can have more money for advertising in the local media. He should also seek a qualified employee to suite the post he will create. He should also seek to be price competitive by finding out where the Tafia sports gets its supply from so to become price competitive.

Mr. Sorefoot should also include the description of problems he is likely to face in his operations and how he will solve them.

Mr. Sorefoot should consider the legal costs, the political environment in the country, if there is political stability in the country, then he should invest in the business other wise unstable political environment is not conducive for investors. He should also the security in the area.

The profit expectations are a bit high for the new firm there fore though it’s a feasible business, they should be reduced.

He should know that poor management contributes for the fall of almost all small scale business failure, the inability to deal with the unexpected occurrences, these occurrences such as changes in the exchange rate, changes in the taxation rates. He should therefore set money aside to deal with the uncertainties in the businesses, he should he seek a favorable insurance policy to take care of these uncertainties and occurrences such as fire and theft.

He should be innovative to think of new ideas and way to manage his business during the hard times. Desire and persistent along with innovative thinking proves all odds, therefore, the business can even change the direction if things go bad.

He should consider the government policies towards these small scale business, the government could be giving incentive or disincentives.

He should start attending some classes on management of business; since he is not trained entrepreneur the classes will help him to manage his business.

PA Q2

The kind of business Mr. Sorefoot is a sole proprietorship. This is form of business owned by a single person who assumes all the risks coming into the business and he is responsible for the profits and the losses. This form of business is the oldest and simplest form of business. This form of business owned by Mr. Sorefoot has many advantages and disadvantages.

Advantages of entrepreneurially managed firm.

There are few formalities required to start up the business. Mr. Sorefoot can begin the business easily because he is required to acquire only the license and capital as the basic needs. The other statutory needs are very few as compared to other business forms like the company or the partnership.

The proprietor of the business is responsible for making all the decision. The operations, policies and goal rest on the individual and the management is contracted. This makes him to make decision fast and no disagreement while making these decisions therefore very little time is wasted.

The owner of the business receives the rewards of the business alone. The rewards will come from good management and labor directly. This makes owner to be very careful while running the firm so that eventually he will attain his objectives, that to make profit like the case of Sorefoot.

There is close monitoring of the day today activities of the business since he is responsible for controlling, directing, organizing and planning. This means that the owner can take the corrective action needed soonest possible whenever any thing goes haywire without having to go through a long chain of command.

The costs of dissolution are low. This is because this will not require many people whom to breakup with many people. Therefore one will not need to hire special auditors and accountants and lawyers to carry out the dissolution.

This kind of business makes it easy for one to invest his personal assets into the business. Mr. Sorefoot can put his personal assets like the house hood furniture if he doesn’t have enough capital.

This business form is easy to be transferred to a willing buyer any time since it’s easy to dissolve.

The owner of the business can take relatively high risks in the business.

It’s most secretive, cheapest and flexible form of business.

Disadvantages of entrepreneurially managed firm.

There is likelihood of having limited capital, this is because one mainly get capital from his personal savings, borrowing donations or grants. This is a challenge as compared to other businesses like the companies who can raise money through the sale of shares.

The entrepreneur cannot acquire borrowed funds unless he shows the capability of paying back within the required period and at the lenders rate.

The liability extends to the personal belonging. If Mr. Sorefoot cannot payback the loans acquired to run the business, then his personal property like the beds can be taken by the leader.

The business pays high tax rates than those individuals forming the companies because they are required to pay the personal income taxes unlike those in the company.

It’s difficult to get the right people for the right jobs; like in our case Mr. Sorefoot business has limited expertise.

There is lack of continuity and stability because it largely depends on the one individual. In our case the firm is dependent on Mr. Sorefoot family.

Question four part B

LEGAL FORMS OF BUSINESS:

Beside the sole proprietor form of business, there are other forms of legal businesses and they include:

Partnership

Companies

Cooperatives

PARTNERSHIP

This is an association of two or more people as the owners of the business who come together as partners with the sole reason of making profits. There is no limit on the number of the partners. The partners can be:

Ordinary/ general partners

Limited partners

In general partner partnership, all partners are liable for the debts of the business and all have equal right to the business.

In limited partner’s partnership, the partner’s liability is limited to the amount of capital the individual has contributed.

Normally one individual is charged with the responsibility of running the day today activities of the firm.

Partnership offers the opportunity to pull the resources together in terms of the capital and technological know-how.

The partnership can be created by oral agreement or by written agreement, but its preferable a written agreement because it offers future reference.

Advantages of a partnership

It’s easy to start because it requires little capital from each partner as compared to the sole proprietorship.

It benefits from the variety of unique talent from the many partners.

It’s easy to bring in more partners when more capital is required.

Control of the business is spread to the partners depending on the sections you have in the business.

DISADVANTAGES OF A PARTNERSHIP

There is unlimited liability to ones personal property.

There is higher tax rates compared to the company because the partners are charged with income tax.

There is lack of stability and continuity when a partner dies or resigns because anew partnership deed must be drawn.

COMPANY

This is an entity which is entitled to:

Own property

Contract debt

Engage in various practices prescribed by the company act

A company is enacted by an act of the parliament and it’s owned by shareholders who are who are treated as one because they don’t own directly but through the shares.

The company’s legal form control capital resources and the resources are owned by the company its self and not the individuals. A company must meet the following legal documents.

Articles of association

It sets forth the purpose of the company and the means to finance it. It also maintains the by-laws and these indicate how the company will be operated in regards on how to elect the directors, duties of the office bearers, voting and by- election procedures.

Certificate of ownership

This could be in terms of shares, bonds or stock. They indicate how much participation one has in the company. The stock could either be:

Common stock

Preferred stock

When a company is formed, shares are sold to those who wish to risk of investing into the company.

Bonds are sold to individuals who want to invest into the company.

Debentures are types of bond with security and the type of bond depends on the interest rate.

ADVANTAGES OF A COMPANY

There is limited liability meaning that you are liable to the extent of your participation.

The company’s legal form gives it an opportunity to borrow funds externally, meaning that it can acquire enough capital unlike the sole proprietors.

It has the capacity to attract highly motivated personnel.

It’s easy to transfer the ownership by selling out your shares to the willing buyer. It’s easy to acquire brokers to sell and trading of the shares.

Its perpetual in nature, the stability and continuity exist over a longer period than other forms of business.

DISADVANTAGES

It’s highly regulated which make it hard to operate, you have to have to hire a company lawyer who has to be the legal advisor avoid misunderstanding and organizational problem within the firm.

There is also double taxation because it pays the corporate taxes and dividends are also taxed.

It contracts very high overhead costs.

It needs an elaborate accounting system therefore becoming an expensive business.

COOPERATIVE

This is a legal form of business recognized by law. It’s a voluntarily business organized formally at a cost, capitalized and controlled by members who own the business.

The owners share the risks and benefits proportional to their participation.

It gives the members an opportunity to all members to pull the resources together.

It must serve its members and if there margins above the cost, they must be returned to the members as dividends.

The major objective of cooperatives is to promote the economic wellbeing of its member.

There are four categories cooperatives, namely:

Primary society

Secondary cooperative society

Country wide society or union

Apex society

Cooperatives are in most cases based on some principles since they offer an opportunity to all its members. Some of the principles are:

The have voluntary and open membership.

Cooperatives are democratically member controlled

The members must participate economically

Cooperatives must be independent and have autonomy

They must encourage cooperation among other cooperatives.

They must have a concern for the community

They should insist on education training and education flows.

 

ADVANTAGES

There is limited liability that is up to your level of contribution.

There is always a broad based capital because of pushing of the resources together.

They can exist all along even with the exit of some members.

DISADVANTAGES

The ownership is not transferable.

The owners have limited participation in the managements

Though there is limited liability, who is usually responsible for the debts of most cooperatives which cause them to collapse.

Sometimes a cooperative may lack adequate resources to meet its objective.

PCQ6 DICUSSION

A firm’s success depends on both internal and external factors. The external factors are called opportunities and threats whereas the internal environment is called the strengths and weaknesses.

The internal environment consists of the resources within the firm. These resources include the employees, the management, the capital available and the technology the firm is currently using.

The external environment consists of the market, technological changes, the government policies, socio- cultural issues and the other global issues. These are factor that the management cannot control within the firm.

EXTERNAL FACTORS

The market is an external that determines the success of the small scale business.

The markets consist of:

Competitors

The supplies

The customers

The kind of competition determines future of the business. The competition may be fair or unfair. The market structure consists of number of player in the market, barriers of entry into the market, and the product differentiation. Depending on the number the market structure can be:

Monopoly

Perfect competition

Oligopoly

The best environment for the small firm is the perfect competition; this is because there is free entry and exit into the market, there is perfect knowledge of all the information in the market, there are many sellers and buyers.

Government policies also determine the success of the small firms. Some policies like the subsidies support them whereas the increases in the taxes e.g. the value added taxes. The government control of the prices can either be supportive or destructive to their growth.

Global issues like the natural calamities such as hurricane and earthquake also determine their future. Changes in the technology can affect their success. Though some firms can lack the capital to adjust from the obsolete technology; adoption of the new technology improves the efficiency in production.

INTERNAL FACTORS

Internal factors also affect the business future. The way the employees are handled and treated by the management determines their productivity, the benefits, salaries and the allowances determine the level of motivation.

The financial resources available to the company also determine its future interns of whether it can expand, can hire qualified personnel who come demanding higher packages, can the company adopt to the changing technology which come along with the cost.

The mode of management also determines the future of these small scale businesses. The manager key responsibilities are to:

Organize

Control

Plan

Direct.

If these functions are not carried out effectively, then these firms are likely not to succeed. The managers must ensures that are democrats so that they don’t fallout with their management, they must manage by objectives to be successful.

CONCLUSION

From the above analysis it’s clear that for the small scale business to be successful they should not only consider the external factors but also the internal factors which go hand in hand to achieve the objective of these firms.

References:

Charles L. Martin (1992), Starting Your New Business: a guide for entrepreneurs,Thomson Crisp Learning.

David Karlson (1994), Avoiding Mistakes in Your Small Business, Thomson Crisp Learning.

Fred S. Steingold (2006), Legal Guide for Starting and Running a Small Business,Nolo.

How to start a business, electronic article, retrieved on first may 2007.

Ivan Taback, Samuel Weiner, Martin M. Shenkman  (2003), Starting a Limited Liability Company, John Wiley and Sons.

Larry J. Robson (1999), It’s Your Business!: Start a New Business, Expand Your Business, Or Move Up the Ladder Starting …,Universal-Publishers.

Stephen C. Harper (2003), The McGraw-Hill Guide to Starting Your Own Business: A Step-by-Step Blueprint for the First Time,McGraw-Hill.

 

 

 

More Venture Capital Raising Regulations Articles