If you are having trouble finding angel investors you may want to work with a capital syndication firm. These companies will source angel investors on your behalf, but it is an expensive process. If you’re going to have a private placement memorandum created, then you’re most likely going to need to have a business plan included within this document as it will need to be seen by any type of capital syndication firm. Angel investors do not usually provide loans, and this fact should be made aware of right away when you are seeking private funding. For large deals, you may want to seek a syndicated group of investors as discussed above. Your CPA can assist you with calculating the anticipated ROI for your business, as this is an important part of working with private funding sources especially if you have had difficulty in regards to this matter,
Group investing lowers the risks associated with putting money into a new venture. You should showcase, within your business plan, how you’ll deal with an economic recession and other issues that may affect your business. Private equity firms may be a good fit for your business if you have had difficulties finding angel investors. Dividends should not be provided to your private investor unless you need to as part of your overall negotiation with a private finding source.
Debt capital almost always requires a guarantee, whereas investment capital does not and if you are working with a private funding source you may want to offer dividends in order to sweeten the deal. Neither small business investment companies nor angel investors expect that their investments will undergo an initial public offering. Large investments may be more appropriate for a venture capital firm that can provide you with large sums of capital for your new or expanding business.
Hard money mortgages are becoming a very popular method of generating a very high return on investment for private investors if you can secure this type of financing against your inventory, real estate, equipment, or other tangible assets. When presenting to an angel investor, you can create a table at showcases all of the available assets that can be used as a security for the investors that you are seeking.
If you are looking for angel investors then you may need a private placement memorandum. The current economic climate has made lending very difficult. Large scale businesses may be better of working with a private equity firm. Angel investors are the life blood of small business investment. It is difficult to find private investment. You may want to take a look at the SBA definition of a small business prior to working with any type of outside financing your business especially when working with an angel investor or private investment firm.
Preferred shares typically do not allow angel investors to have a say in the ongoing management of your business, and they provide a significant return on investment for private funding sources. This may be a good alternative when you are thinking about selling a portion of your business to a third party. Your certified public accountant should be involved in any transaction that deals with the sale of preferred shares to an investor.