• What to Look For in an Investment Firm for a New Business

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  • Category: Finance
  • Published Date: January 31, 2022
  • Modified Date: January 31, 2022
  • Reading Time: 4 Minutes

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Starting up a new business can take a lot of capital. It can take so much that it might take years of profitability to pay any of it back. You can get around this by having an investment firm contribute to your needs, but you need to know what to look for in an investment firm for your new business.

How Long They Stick Around

You might not have any control over how long a particular investment firm sticks around with your business. However, you can look into their past. Some venture capitalists are notorious for getting involved with businesses solely for the purpose of trying to flip them. If you’re looking for a long-term relationship, be open and honest about that. Take your time in deciding who you want to go with in the end, after all, it is your money, not theirs.

Their Industry Experience

Many investment firms will focus on specific industries and sectors, whereas others might just leap into new businesses simply hoping they plant enough seeds to see a few things bloom. Just because someone is willing to put money into your particular enterprise doesn’t necessarily mean they’ll be there to help you grow with their expertise. Many investment company records are required to be public by law. Though the names of clients may not be available, you can still find out a total of people or companies they have worked with. You can usually find out their average amount invested and for how long they’ve invested in companies.

How They Raise Capital

Some investment firms represent wealthy individuals looking to park their money in up-and-coming businesses in the hopes of enjoying a portion of the coming profits. However, not all investment firms rely solely on traditional networks with people of high net worth. If you want to open your business up to all kinds of investment angles, then look for one that handles the buying and selling regulation CF shares so you can take advantage of crowdfunding. The more flexible you are in receiving new kinds of financing, the more options you’ll have at your disposal.

What It Will Cost You

Having anyone invest in your business, be it a single partner or firm or a collective group of individuals, is going to mean they want something back. Will it be partial ownership of your company? Or will stock shares and slices of the profits be enough? You might not be able to get your business off the ground without them, but what you are willing to give up in return for their funding might be open to debate and negotiation. Be sure that the terms are very clear and that you have all of your questions and concerns addressed. You do not want to get into a situation where you become a savings account for someone else and they begin to take profit from your business without warning.

Investment Opens Up Opportunities

The right investment firm might do more than just make your new business possible. It might create opportunities for growth and expansion you didn’t think would be possible or hadn’t considered. Be sure you make the most of your investment relationships and connections. If you show that you are worth investing in then when the time comes to make a larger expansion to your business it is highly likely that it will be easy to obtain the funds needed.

Remember that your business needs to be treated like a child. You need to be patient with everything and everyone. Set boundaries, but also be willing to step in and help where you can. Be the leader and show investors that you are worth their time. By taking care of your business, they, in turn, will take care of you when you ask for funding.

Rachelle Wilber

By Rachelle Wilber
who is a freelance writer and residing in San Diego, California area. Rachelle finds an interest in all topics and have Bachelor’s Degree in Journalism and Media Studies.

Member since September, 2018
View all the articles of Rachelle Wilber.

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