Posted on Thursday, July 14th, 2011 at 1:13 am.
One of the decisions a company must consider while fund raising from potential venture capital partners is to look for a good standing placement agent. This is in order for a company not to spend too much of its own time seeking for seed capital, mezzanine capital, or growth capital funding for startups or various business expansions. A company can be better served using a placement agent that has a strong network of seed capital, venture capital and growth capital connections, allowing the company to focus more on their core competencies and other management issues rather than spending so much time seeking for investment partners.
Placement agent acts as an intermediary in the world of fundraising. Agents are sometimes individuals but more often a firm who assist entrepreneurs, private equity groups, or institutional investors who are willing and capable of investing. Their main function is to help connect those who are seeking to raise venture capital, and other various investors who are interested in investing capital into companies who are looking to raise funds.
It is a very challenging task for a placement agent to connect entrepreneurs with venture capital partners. Companies located along Sand Hill Road in Silicon Valley who can raise venture capital, growth equity, or mezzanine debt with reasonable ease will obviously not consider using an agent. But for companies located outside Silicon Valley in areas with less developed venture capital markets, an agent is a very reasonable option.
As companies search for venture capital partners or equity investors, it is important to seek out the partners who will offer favorable terms. Placement agents generally have legal backgrounds with representation from top Silicon Valley law firms and provide valuable legal counseling. Agents work to seek investors who have strong value propositions along with their financial investment through their experiences, expertise, and network of contacts.
GrowConnect offers a range of private placement services to entrepreneurs as well as private equity groups. With a vast network of equity investors and high caliber legal representation GrowConnect will work to raise capital for your offering.
Posted on Saturday, June 4th, 2011 at 5:35 am.
Venture capital is not an easy game. Not all venture capitalists have been successful investing in start ups in different fields such as infrastructure, innovation, biotechnology, information technology, or software. Investing in these types of businesses involves great risks and hard works, not to mention the huge amount of money that they have to venture in. Venture Capitalists assume enormous risks with high levels of uncertainty.
Successful VC investors accept uncertainty as an integral part of being in business. They must be ready to face many crises and allow temporary failures without having to panic. After all, failure is the mother of success. Even Thomas Edison, a genius inventor, failed a thousand times before he finally succeeded with his inventions or discoveries. Talk to an entrepreneur or to any group of up-the-corporate-ladder type businessmen who sees innovation and creativity as the path to profitability and long term sustainability, and they will share openly about failures, mistakes, and setbacks as steps along the path to success.
Venture Capitalist Adi McAbian, a 36 year old successful entrepreneur who is the managing director of TwistBox, and a board member of the Internet Task Force of Boston, has a proven track record for creating, growing and selling successful businesses. He shared that the secret lies in being able to harness that idea and quickly bring it to fruition in a cost-effective manner. “Many budding entrepreneurs get too caught up with the massive amount of detail involved in creating a burgeoning company’s infrastructure, rather than focusing on the business itself,” explains Adi McAbian, “I advocate outsourcing the basics to those that specialize in this. To be successful in this tough economic climate, you need to focus 100 percent of your attention on your business model and customers.”
On the other hand, mastering the VC game combines the right mix of facts, advices, people and stories. Integrating the experiences of notable entrepreneurs is extremely helpful and beneficial. Dee Power and Brian E. Hill, authors of Secrets to Unlocking Venture Capital for Your Company, also shared the secrets to obtaining venture capital:
- Preparation – It is imperative to prepare yourself and your company in searching for seed capital or growth capital by developing a clear, concise, and realistic business plan that would make the reader excited about the opportunity that your company would present. Failing to clearly identify the opportunity is the most critical mistake that entrepreneurs make, according to venture capitalists. Before you approach an investor, speak to advisors or other entrepreneurs who have worked with them to find out as much as you can. Provide a strong and experienced management team with diverse range of expertise. And do not make simple mistakes such as wrong spelling, grammar, or computation.
- Positioning – To make sure that what you are offering is what they are looking for, research the investment criteria of the venture capitalists. A company that does not match with the venture capitalists’ investment criteria is the second most common reason why they are being declined. It is also important to get referrals by other VC firms, and get one if you do not have one yet.
- Perseverance – Keep trying. Do not give up. Follow up your submitted plan through phone call, fax, or email weeks after your proposal. Or you can be persistent by calling the VC firm everyday. Continue to widen your network of contacts to give you more avenues of approach to the investors. And most of all, believe in your passion about your company.
An accomplished venture capital investors spend a lot of time digging into an entrepreneur’s past failures because they believe that such failures will make an entrepreneur more amenable and responsive. Success stories have many milestones – positive and productive, or even setbacks. But it is not what you lose from setbacks, rather what you learn from it and apply that would make a ventured business a success.
Posted on Wednesday, April 27th, 2011 at 10:40 pm.
Most often a high-growth and mature companies look for funding to increase their profit, to expand, to restructure operations through organic approach, to enter new markets, or to finance a significant acquisition without a change of control of the business. These companies seek for growth capital to finance a major transformation of their business.
Growth capital is a form of private equity investment in a late-staged level of a business life. Financial institutions tend to provide this capital to businesses who are able to generate revenues and operating profits, and to those companies who have already reached a stable point where they are capable of exploring opportunities or expansion but unable to generate sufficient funds. Financial firms who provide growth capital support businesses that have market leadership potentials.
Growth capital is also known as growth equity and expansion capital. It exists at the intersection of private equity and venture capital and it is provided by a variety of sources. Companies who seek for growth capital are likely to be more mature than venture capital funded companies because they have already established their revenues that are already proven in markets or industries. Because of insufficient funds these companies generally can find alternative conduits to obtain capital for growth and expansion.
Growth capital is often structured as either Common equity – a type of capital used to directly absorb losses; or Preferred equity – a measure of equity which only takes into account the preferred stockholders, and disregards the common stockholders. While other investors also use various Hybrid securities that include a contractual return such as interest in payments, in addition to an ownership interest of the company. Hybrid securities are group of securities combining debt and equity, the elements of the two broader groups of securities. It behaves more like fixed interest securities while others behave more like the underlying shares into which they convert.
There are numbers of dedicated growth equity firms around the United States that can provide the financial needs of your business development. The amount of capital that can be produced would range anywhere from $2 million to $100 million, depending on the firm and whether they would take a majority or minority investment in your company. Since this type of financial service involves a great amount of capital, therefore it is best to partner with financial firm who have time-tested and battle-hardened fund raising techniques, who do not just provide you financially but coaches you as well, and most importantly, who delivers service with the highest sense of integrity.