So you are thinking of opening up your own angel investment or venture capital fund, you’ve got great business acumen and have picked the perfect niche that is in a new and exciting industry but will still weather the storm of a recession. All seems to be going well, and while it would make sense to take about any great investment opportunity that came your way. A key mistake that many getting started with angel investing make is to not pick an appropriate stage of growth.
Startup stages of growth to choose from:
Family & Friends Round
Unless a startup is lucky enough to land a spot on Shark Tank. Most startups will start with a friends and family round with small funds provided to an inventor or entrepreneur to prove a idea. In the event the first steps are effective, this will entail product development, market research, developing a management team, and also creating a business strategy. This really is really a pre-marketing stage.
While it is called a friends and family round, the money doesn’t necessarily have to come from friends and family, you can still invest but rather than investing in proven metrics you are really investing in the entrepreneur. You’re investing in the “jockey” not the horse so to speak.
Early Stage Funding
Many of the equity crowdfunding investments you see on Kaxlo are in the early stage funding phase. When you invest you’ll be providing funding to businesses completing development. Goods are for the most part being beta tested or manufacturing is complete. Often the product or service just launched and is becoming commercially available. Some businesses can hit this stage in months while others it takes decades.
Early stage entails the very first round of funding after startup, which comprises a institutional venture capital finance. Seed and startup funding often involve angel investors over institutional investors. You should always look for companies with revenues. It doesn’t have to be much a few hundred dollars is just fine, but be sure to identify if the founders are capable of making sales and are focused on the business metrics.
Expansion (Mid) Stage Financing
This phase involves implementing working funds to the first expansion of a firm. The Business is now shipping and producing also has growing accounts receivable. And stocks. It may or might not be showing a gain. A Few of the applications of funding May consist of additional plant growth, advertising, or development of a better product. More institutional investors are more likely to be contained Together with first Investors from preceding rounds. The VC’s function in this phase involves a change from A support function to a strategic function.
Private Equity Capital
Inside this phase is supplied for businesses which have attained a rather steady Growth rate–which is, firms which aren’t growing as quickly as the prices attained in earlier startup phases. Again, these firms may or Might Not Be generating a net income, but are more likely to become more significantly profitable than in preceding phases of development. Other monetary Attributes of those businesses consist of positive money flow. This also contains Companies contemplating IPOs