Common Ways Of Venture Capital Financing In The US

First, compared with securities investment, bonds and stocks are generally cheaper and easier to find than securities investment.

If you choose to invest in bonds, you need to repay the debt every month, whether your cash flow is positive or not.

Securities investors in the early days only expect less returns or expect a return, but they want to know the details of the company's development.

They gambled on risky businesses with high returns.

Therefore, investors look forward to achieving their goals and hope that enterprises will move towards new milestones.

Bond financing is generally applicable to all types of enterprises.

Securities financing is usually limited to enterprises with high development potential.

Note: what kind of bond financing is suitable for my company?

How much debt can I bear?

If I lack liquidity, do I still have solvency?

What will happen if interest rates rise?

Are I willing to use company and personal assets as collateral?

How about using personal guarantees?

Borrowing money is not a simple personal problem. It needs careful analysis.

Do you have enough assets?

Do you have a good reputation?

What should I pay attention to?

Are I willing to share company's control and future benefits with others?

Is it true that I am willing to make investors an eternal partner?

How many shares are I willing to give up?

Can I keep up with the progress of all reports?

What will the company tell the potential investors?

Compared with companies with a history of two or three years of success, investors hope to have a bigger share of new ventures.

Two, angel capital is a single private investor who makes up most of the "informal" venture capital.

These investors usually invest their money in nearby areas (about 50 miles).

Their investment is often small (000 to 0000), and it is hard for you to find them because they do not have network connections or business associations.

Can I keep up with the progress of all reports?

What will the company tell the potential investors?

Angels usually come from friends, relatives, customers, third party professionals, suppliers, brokers and competitors.

In most cases, once the angel has invested two or three funds, the money in their pockets will be exhausted.

There are also a small number of service providers looking for private investors.

Beware of those who claim to be able to get in touch with investors for a larger prepayment (000 or more).

We should try our best to find investors.

If you have submitted an investment application to an investor, you can find a negotiating agent.

Note: before you tell securities broker, do not advertise in your local newspaper to find investors.

Otherwise, the securities and exchange center may summon you.

Three, the managers of such funds are called "venture capitalists" by insiders.

This title may not be appropriate, but it often reflects the real situation.

These investors are looking for huge returns, not just better returns.

Obtaining venture capital is extremely difficult. Competition between enterprises applying for venture capital is fierce.

These venture capital funds receive thousands of applications every year, and only two or three enterprises get venture capital.

Managers of these investment funds are good at finding oysters that produce pearls.

They are usually astute, well-educated, and extremely conceited.

You must be careful when dealing with them.

If you have other ways, you'd better turn to another way.

But if you have enough confidence in the future of the enterprise, you may wish to cooperate with these investment experts.

Four, joint venture / strategic partnership, the following is a combination of two companies with similar interests based on common needs: (1) they have money.

You have plans. (2) you have products.

They have vendors trying hard to find companies that are similar to your interests.

Of course, more investigation is needed, not just the application for loans.

Most partners will inject 20% to 40% of the shares in your company.

Don't just think about how to win investment and learn to protect your creativity.

Before you read your business plan, ask your investment partner to sign a creative or technical confidentiality agreement.

SBA is a huge resource, but too much information is also a tiring thing to read.

SBA has many different plans.

The local bank will have a person in charge of the SBA loan. He will explain the matter to you.

The most dynamic two loan funds in the United States are the AT&T fund and the The Money Store.

SBIC, a small and medium enterprises investment company (LEO), leveraged financing, that is, a large amount of government funds are collected by private capital, thus forming a short-term venture capital fund.

Most SBICs is part of a commercial bank.

They provide long-term loans and investment in securities.

These companies are very conservative in their investment orientation and invest only in successful companies, such as managing buyout, strategic partnership, listing capital and pitional financing.

It is a short-term bond financing tool with a period of 2 to 270 days. It is five.

This is a promise paper, which is discounted after its face value is discounted.

These instruments usually have letters of credit or other forms of credit guarantee.

A company can use property as collateral to obtain a letter of credit and leverage it to become a commercial instrument.

Six, the letter of credit, the Bank of credit, as your agent's credit certificate to your investors, will be used as a guarantee for your future payment.

If you do not pay, the bank will pay the investor.

The bank will issue the letter of credit (L/C) on the basis of your receivable assets or other physical assets.

It is a traditional way of financing to sell seven of accounts receivable.

The funds to be paid before the goods are sold, received, but not paid.

The average advance payment is 80% to 90% of the accounts receivable.

The lender expects the borrower to repay within 90 days.

This method of financing can also be applied to accounts receivable with a longer term, but the interest rate of loans may increase dramatically. After all, such accounts are more risky.

Eight, purchase order, advance payment, leverage and leverage to support your future.

If you get your basic customer's purchase order, you can get the prepaid capital before the product is completed.

The average advance payment will be 50% lower than the normal payment, which is rather expensive.

So, unless there is no other way, do not choose this kind of financing.

Nine, equipment leasing, and you can think that this kind of financing is asset leasing.

You get the equipment you need, but you must pay the rent at a specified time limit.

There is no question of interest rate here, but the rate of paying rent is often higher than the interest rate of commercial loans.

This shortcoming can be partially offset by the fact that you can calculate the amount of payment as 100% of pre tax expenditure.

Check with your tax accountant to see if this is the case.

Ten, sales of fixed assets and leaseback. If you are short of cash and too many fixed assets, this method will suit you very well.

Now you can sell your fixed assets to an investment fund to get cash, and he will rent it back to you (you usually have the rent and purchase right).

This approach may lead to problems such as capital gains or sales tax.

Eleven, the public offering of listed companies will enable you to raise more capital and have more investors.

If you can spend time on distribution, it will become a very good financing tool.

Contact the securities and exchange center. They will be happy to introduce these rules and forms to you.

Twelve, limited partnership, you can find or simply form a limited partnership.

Limited partnership companies are usually investment companies.

Limited partners provide all funds, while general partners are responsible for all external matters and management.

At present, the United States has established a large number of opportunistic limited partnership companies to invest in enterprises.

If you want to set up a limited partnership, you can look for it yourself or inquire about these limited partners to the relevant administrative agencies in your state.

Thirteen, convertible debt. This is actually a loan that can be converted into the ownership of the company (the lender has the option).

This approach comes from seed funds or venture capital funds: if you succeed in the future, the lender will join your business.

Most countries have national income bonds fourteen.

These bonds are usually used as a borrowing tool, issued by the company, and the state institution promises to pay.

The issuance of these bonds is usually aimed at promoting the development of manufacturing that can create jobs.

Fifteen, Lines of credit. The nature of this circular account is continuous.

These forms of accounts are generally secured by accounts receivable and inventory.

The main types of corporate finance are mentioned before.

All kinds of creative ways can be used as a financing way for your company.

If it happens, it will take some time to study it carefully.

The more you know about corporate financing, the better.

Even if you are on the right track, if you just sit there and remain still, you will eventually be surpassed by others.

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