Angel Investors and Alternative Financing

It is extremely important to keep your financing options open. Prior to looking for angel investors, you should look at programs offered by the Small Business Administration. Angel investors are the life blood of small business investment. In limited instances, these private investors will syndicate their investment with other funding sources if the investment is large but not large enough for a venture capital firm. Not every business needs a capital investment. Writing a business plan for your company is a difficult process.

There are many industries that are less risky and therefore more attractive to angel investors. If you business is profitable then a SBA loan may be a better fit for you. Popular industries amount angel investors include auto repair businesses, medical businesses, law firms, and other companies that are always in need. When seeking private investment, you will need a well developed cash flow analysis. In some instances, your certified public accountant can handle issues as it relates to incorporating your business in the state for a business friendly state. If you qualify for a bank loan, then using angel investor may not be in your best interest.

Only extremely large businesses, with values in excess of $50 million, are appropriate candidates for an initial public offering if you are seeking an extensive amount of capital. As an alternative to seeking equity investors you may want to look into specialized white using programs. Your lawyer should have a number of documents prepared for you in regards to raising capital as you are going to need to comply with any and all applicable securities laws.

When writing your business plan, either for an angel investor or any other type of funding source, you should always include a yearly budget as part your financial forecasts. There are many quality sample business plans available online that can assist you with this process as you are seeking financing.

Technology-based businesses are highly prized by angel investors that may qualify you for alternatives to private funding sources. It is imperative that you work with a properly qualified attorney when you are looking for private funding sources. It should be noted that most private funding sources that provide equity usually do not provide loans. Technology businesses are highly favored by venture capital firms, and this may be a better alternative if you need a large capital investment. Hard money may be an alternative for you as it relates to raising money from outside funding sources.

How Venture Capital Is Different From Traditional Financing?

Venture capital is a new form of financing that has come as a boon for young entrepreneurs and it plays a strategic role in financing small scale enterprises and high technology and risky ventures. In all the developed and developing nations it has made its mark by providing equity capital, so, they are more like equity partners rather than financiers and they are benefited through capital gains.

As young and growing businesses need capital at the right time, not only to float their company in the market, but also to survive in the long run. When financial institutions like banks and other private financial organizations hesitate to take the risk of early stage financing, since the credibility of the budding firm is not established, venture capital firms comes into the foray to fund the project in the form of equity which can be termed as “high risk capital”.

Although there is a misconception that the interest of venture capital firms are mainly driven by cutting edge technology in the industry, it is not always the case with all venture capital firms. A venture capitalist associates high risk with huge profits. Of course after thoroughly analyzing the prospects and consequences and the viability of the project. The venture capitalist becomes a partner with the entrepreneur in his business. True venture capital financing need not confine itself to high end technology products, any risky idea with great potential can be financed and venture capital is an all powerful mechanism to promote and institutionalize entrepreneurship.

Mainly venture capital focuses on growth. A venture capitalist is very much interested to see a small business growing into a larger one. He assists in setting up the business, funding it and comes all along to seethe firm grow. If it is a potential equity participation, the venture capitalist can come out of the partnership once the company becomes profitable and take back his money by selling the shares or convertible securities. If the firm opts for a long term investment from the venture capital finance, the financier has to develop an investment attitude for a long term, say five or ten years to allow the company to make large profits.

Another form of financing is that the venture capitalist has his hands on management by which he becomes an active participant in the operations of the firm and his thinking is streamlined as to how to multiply and make quick money which is a win-win situation for both sides. Not only finance, the venture capitalist also contributes to marketing, technology upgradation and management skills to the benefit of the new firm.

The venture capitalist’s management approach is significantly different from that of a banker whose prime concern is collaterals and securities in the form of assets. He keeps his hands off the management and plays safe. The venture capitalist can also not behave like a stock market investor who invests money without having thorough knowledge about the company’s business and management. He combines the qualities of a banker, stock market investor and an entrepreneur in one.

Latest trend is that popular and giant software companies promote their content through the budding enterprises, by providing with the latest technology, training and expertise apart from finacing, which spreads the geographical area of operations of the parent company and also expand their territory to scale greater heights. Venture capital firms should focus on fostering growth and development of the enterprise and need not confine their interests only to finance technology, infrastructure, information technology services and the like. They need to diversify their investment in various sectors and even revival of sick units can be thought of as one of the options if there is potential in the business.

Technology Equipment and Software Financing

Technology equipment and software are very important for a business in today’s world. Technological or software equipment includes new computer system, routing software, safety equipment and so on. These types of equipment are generally very expensive and so the need for technology equipment and software financing arises. However most of the traditional lenders may not be ready to finance technological equipment or software. This is due to their inability to understand the purpose and type of this equipment. Therefore an expertise approach is required to understand the need for technological and software equipment. There are some genuine financing companies that offer help to acquire these types of equipment.

There are various categories of technology and software equipment. Therefore various options are allowed by financial institutions to get technology equipment and financing help. Audio visual equipment is one among them which includes cameras, sound equipment and so on. This equipment is really important for companies that specialize in audio video. Seeking the financial assistance of financing companies is required due to high price tags of this equipment.

Safety and security equipment is essential for certain companies. These types of equipment include metal detector, alarm equipment, closed circuit TV, digital video recording, motion detector, security gate, fire suppression and so on. These types are vitally important for maintaining the personal safety and security. Due to its highest price ranges, most of the companies could not afford to buy it. But technology equipment and software financing makes it possible for almost all companies to acquire safety and security equipment.

Telecommunication equipment helps in effective business communication. Thanks to these types of equipment, many companies are functioning properly without any communication gap. Latest telecommunication equipment is available now which helps in effective communication. Broadcasting equipment, multiplex equipment, telephone system, transmitting equipment etc are really important for a modern office. However their price ranges are extremely high making it impossible to afford for small and medium companies. Technology equipment and software financing is the only best option to meet all the essential requirements.

Computer hardware is essential for most of the companies. Since their prices come down, most of the companies can get it easily. The data storage equipment, server, work station, network etc are vitally important for any business in today’s world. But the computer hardware has undergone constant changes. When the existing hardware becomes old, you need to buy a new one. This situation calls for the help of technology equipment and software financing.

Software financing is required to acquire the latest software. The traditional lenders would not be willing to provide financial assistance to buy the software. However accounting software, ecommerce software, manufacturing software, CAD software etc are essential for the business operation of most of the companies. In fact, every company requires certain type of software. Some of the reliable financing companies recognize the need for software financing and they offer essential help.

Since there are no embarrassing procedures for getting the technology equipment and software financing help, any company can apply for the financial assistance from the valid financing company.