Private Equity Investments: Overview
I. Bank loan
If you are an entrepreneur looking for investments, you have several options. From the one hand, you can go to the near bank office. The bank will ask you to show the business plan and, what is more important, will look at your shoes. Good clothes open all doors. Speaking frankly, the bankers usually ready for investments by providing you a credit line if you have something behind your shoulders, such as assets that could be sold by the bank in case of insolvency. Usually, entrepreneurs cannot afford to show assets or persuade the bankers that their technology could be high valued. Specifically, if we are talking about startup, such assets could be risky for bankers. From the other hand, you can try to ask investments through crowdfunding platforms.
II. Crowdfunding
Crowdfunding investments refer to the practice of funding a project or venture by raising small amounts of money from a large number of people, typically through an online platform. Crowdfunding can be used to fund a wide range of projects, including creative endeavors, social causes, and business ventures. Investors typically receive some form of reward or equity in exchange for their investment, depending on the type of crowdfunding campaign. Crowdfunding has become increasingly popular in recent years as a way for entrepreneurs and small businesses to raise capital and bypass traditional funding sources such as banks and venture capitalists. However, crowdfunding investments are generally considered to be higher risk than traditional investments, as many crowdfunding projects fail to meet their funding goals or do not achieve the expected returns.
A bargain is a bargain. All is about the money. However, no need to be disappointed. God helps those who help themselves. That is why you need to look for another options to grow your business. And here we are -- at private equity investments.
III. Private Equity
Private equity investments refer to investments made in privately held companies that are not publicly traded on a stock exchange. Private investors, such as venture capitalists, venture funds or venture syndicates typically invest in companies that have high growth potential and are looking to expand or make strategic acquisitions. Unlike public companies, private equity investments are not subject to the same level of regulatory oversight and are often held for a longer period of time before being sold or taken public.
Usually, you should start to look for investments through a private equity by searching guys who invest or ready to invest in the same 'risky' ventures, such as:
(i) 3F: Family, Friend and Fools.
Family, friends, and fools (FFF) raising investments refers to the process of seeking funding from people close to the entrepreneur, such as family members, friends, or acquaintances. These individuals are often willing to invest in the entrepreneur's business idea based on personal relationships and trust, rather than a detailed analysis of the business plan or financial projections. FFF investments are typically smaller amounts and are considered a form of seed funding to help the entrepreneur get their business off the ground.
(ii) Accelerators
Startup accelerators are programs that provide mentorship, resources, and funding to early-stage startups in exchange for equity. These programs typically run for a fixed period of time, ranging from a few months to a year, and aim to help startups accelerate their growth and achieve key milestones. Accelerators often provide startups with access to industry networks, investor connections, and training in areas such as business strategy, marketing, and product development. The ultimate goal of a startup accelerator is to help startups become investment-ready and achieve success in their respective markets.
(iii) Angel Investor.
An angel investor is an individual who provides financial backing to startups or entrepreneurs in exchange for equity ownership in the company. Angel investors typically invest in early-stage companies and provide funding to help them grow and develop. They often have experience in the industry and can provide valuable advice and guidance to the entrepreneurs they invest in.
(iv) Venture Capitalist.
A venture capitalist, on the other hand, is a professional investor who manages a fund that invests in startups and early-stage companies. Venture capitalists typically invest larger amounts of money than angel investors and are more focused on high-growth potential companies. They also provide strategic support and guidance to the companies they invest in, with the goal of achieving a significant return on their investment.
(v) Venture Syndicate.
A venture syndicate is a group of investors who come together to collectively invest in a startup or early-stage company. The syndicate may be led by a lead investor who sources the deal and negotiates terms with the company, and other investors can then choose to participate in the investment. By pooling their resources and expertise, the syndicate can provide the startup with a larger amount of funding than any individual investor could provide alone. Additionally, the syndicate members can bring their diverse skills and networks to support the company's growth and success.
(vi) Venture Funds / Venture Capital Firms.
A venture fund is a type of investment fund that pools money from investors and uses it to invest in startups and early-stage companies. These funds are typically managed by professional fund managers who have expertise in identifying promising investment opportunities and managing risk. Venture funds typically take an equity stake in the companies they invest in, and may also provide additional support such as strategic guidance, mentorship, and access to networks of industry contacts. The goal of a venture fund is to generate a return on investment by helping its portfolio companies grow and succeed, and eventually exit through an IPO or acquisition.
(vi) IPO
An IPO, or initial public offering, is the process by which a privately held company offers shares of its stock to the public for the first time. This allows the company to raise capital from a wider range of investors and provides liquidity to existing shareholders. An IPO typically involves a company working with investment banks to underwrite and sell its shares to the public on a stock exchange. Once the shares are publicly traded, the company is subject to increased scrutiny and reporting requirements from regulators and investors.
IPO is the highest level of doing business because when the business goes to IPO it means that your business is offering shares in exchange for money to unlimited people. An IPO can be costly and usually for well doing businesses.