Getting Investment.
The investment route to acquiring funds is a challenging route for a start-up. As investments are against equity rather than on collateral, the investors would be sharing the risk. Hence, the investor would be as interested in you as an entrepreneur, your vision and your commitment to the enterprise as he would in the assets you have created.
If you have a sufficiently innovative idea, you may approach angel investors who would help you at the starting stage. A commendable business plan too can help you arrange alliances and therefore obtain financing from them. Like bootstrapping and getting a bank loan, obtaining funds via investors has its share of challenges. In this day and age, having high-profile investors can give you new business credibility and contacts, which can help make your business a success. Though success cannot be guaranteed, it can provide you with a source of financing that can easily help make a more rapid growth.
You usually have to give up a large percentage of equity ownership in exchange of venture capital funding. This gives them a huge say in your business, which could put you under great scrutiny in your duties and earnings. When accepting this way of funding, you also have to agree to certain restrictions with the investors on things such as how you will pay yourself, how involved you will be in other operations and how much equity you will have to give up to your investors.
But more than the current assets, the investor would base the investment decision on the potentially inherent in your business to grow dramatically in the near future.
Growth Potential of your enterprise is measured in terms of your own commitment to your business, as you are the most important aspect of it. Investors will then determine the value of the concept, the potentiality of the market and your financial projections. The crucial aspects over which the final decision rests is the intangible value you have created in your business in terms of the brand, the goodwill with customers and the processes and systems put in place that deliver satisfaction to customers.
Your commitment to your enterprise will be viewed in terms of how much of your personal assets have been invested and whether you are dedicating all your professional time and attention to the business. The originality of the concept and the difficulty to replicate it will enhance investment prospects as it keeps you ahead of the competition. The size of the market is important to see if the growth plans would be supported by availability of targeted customers. These factors being default, investors will be keen to review the extent to which you have been able to build success in your business.
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