{"id":4299,"date":"2012-08-11T11:21:59","date_gmt":"2012-08-11T15:21:59","guid":{"rendered":"http:\/\/blog.fitnyc.edu\/hottopicsinsider\/?p=4299"},"modified":"2020-01-21T18:53:38","modified_gmt":"2020-01-21T22:53:38","slug":"funding-your-business","status":"publish","type":"post","link":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/2012\/08\/11\/funding-your-business\/","title":{"rendered":"Funding Your Business"},"content":{"rendered":"

What do Angels and Venture Capitalists have in common?<\/strong><\/p>\n

Have you often wondered what the difference is between an Angel inventor and a Venture Capitalist? There really isn\u2019t much difference except for the size of the investment in your business.<\/p>\n

Angels are private investors who are looking for a better investment and return than traditional investment schemes, like in the stock or bond markets. The age of the company and other specifics are on their checklist: early or formation stage and they look for a payback and a return on their investment where revenues are between $2 million and $10 million. They would usually expect preferred stock in return for their money which would pay semi-annual interest for the use of their money. After 5 to 7 years they would expect to be paid back and exit.<\/p>\n

Venture Capitals are on a higher plane than Angels and can be private equity funds. They invest in early stage companies expecting a high return for the high risk involved where revenues are in excess of $10 million. Venture Capitalists look for companies with a defensible market position, strong management team, positive EBITD and discernible growth characteristics.<\/p>\n

So what do these Angels and Venture Capitalists look for, you may ask? Think about the program Shark Tank<\/em> seen on ABC-TV on Friday nights. You may have seen Angel investor Kevin O\u2019Leary quizzing the presenting owners of small companies. He asks, \u201cHow am I going to increase my investment?\u201d \u201cWhat are your goals for the business?\u201d \u201cI don\u2019t like your valuation!\u201d \u201cWhat are your margins?\u201d \u201cWhat are your sales and in what timeframe?\u201d<\/p>\n

What is making him salivate or not over the company\u2019s products? These attractions are not unlike what the Venture Capitalist looks for. Take a look at the following:<\/strong><\/p>\n

1.<\/strong>\u00a0\u00a0 Unique or proprietary products or services. A patent owned by you is a plus.
\n2.<\/strong>\u00a0 \u00a0Existing sales are evidence of consumer demand where revenue growth is greater than 20% to 50% year to year; gross margins are over 40%; and with a lean management team.
\n3.<\/strong>\u00a0 \u00a0Increasing sales would be the result of their investment by marketing or hiring additional personnel, which they will\u00a0 oversee.
\n4.<\/strong>\u00a0\u00a0 Realistic valuation based on your sales and profits
\n5.<\/strong>\u00a0\u00a0 Exit strategy must be included in your plans, like selling the company or merging with another company.<\/p>\n

While some of you may say that seeking funding from these people is not worth it. Think of this. If you did not have their investment you would not be able to grow your business faster, gain market share and have the benefit of their expert opinion and management expertise. Their contacts and relationships would help you gain clients and suppliers for increased revenue and growth. So it is worth it, but make sure that you benefit from the relationship as much as the investor would. It is a two way street.<\/p>\n

Margo Moore teaches BE 261 Starting a Small Business<\/a>, CEO 001 Setting a Course for Your Business<\/a>, CEO 002 Knowing Your Market<\/a>, and CEO 003 Formulating Your Financial Strategy<\/a>. <\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

What do Angels and Venture Capitalists have in common? Have you often wondered what the difference is between an Angel inventor and a Venture Capitalist? There really isn\u2019t much difference except for the size of the investment in your business. Angels are private investors who […]<\/p>\n","protected":false},"author":258,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"post-templates\/post-middle-column.php","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[8577],"tags":[8659,8576,15519,8572,38568,15524],"class_list":["post-4299","post","type-post","status-publish","format-standard","hentry","category-small-business","tag-angel-investors","tag-entrepreneurs","tag-funding","tag-retail","tag-small-business","tag-venture-capitalists"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p1v7EM-17l","_links":{"self":[{"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/posts\/4299","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/users\/258"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/comments?post=4299"}],"version-history":[{"count":0,"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/posts\/4299\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/media?parent=4299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/categories?post=4299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.fitnyc.edu\/hottopicsinsider\/wp-json\/wp\/v2\/tags?post=4299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}