PE & VC
Companies investing private equity or venture capital offer medium- to long-term capital to enterprises whose shares are not traded on any stock exchange. Usually, this investment is made for a period of 3 to 7 years. The aim is to support the companies' growth and success in the market.
If an entrepreneur plans to establish or expand his or her own company, buy out a company or a division of his or her parent company, or transform or revitalize his or her company, PE/VC can help him or her to achieve these objectives.
Acquiring private equity or venture capital is very different from obtaining a loan or credit, for example, from a bank. Banks typically require guarantees and charge the company for regular payments of interest and principal. Banks have legal entitlement to loan interest and payments of capital, regardless of whether the company is successful or not. PE/VC is provided in exchange for acquiring a stake in the enterprise. Investors, therefore, become shareholders or partners (depending on the company's legal form) and the return on their investments depends on the growth and profitability of your company.
Firms providing PE/VC aim to assist enterprises by means of advisory, as well. In addition to funding, the investors thus also provide reliable know-how in company management. Such resources are often referred to as "smart money".
Basic questions a PE/VC investor asks when deciding about an investment
Does the company have the potential for high growth in value in future, and is the team of people who represent the project willing and ready to implement the business plan quickly?From a sales point of view, does the company have a product or service that has a competitive advantage or exceptional characteristics?Do the company and the team of people implementing the project have the necessary experience in the given area? Is there a clear team leader in the company as well as people with other necessary knowledge and experience (e.g. in company management, marketing, financial matters, etc.)?Are the company's owners willing to accept the PE/VC investor as a joint owner?
The most effective way to acquire an investor is to choose several potential investors and then to provide them with your business plan.
When choosing an investor, it is necessary to bear in mind the following key factors:
Stage of company development.Sector in which the company operates.Amount of investment that the company needs.Geographical market in which the company operates.
Investors can be found in the section "Association Members" according to preferred type of investment and sector and with an indication of the scope in which they invest.
How to prepare a business plan?