editor’s note: in this paper, the author George Deeb is Rocket Ventures managing partner
venture investors and private equity investors focus is different. Vc firms usually pay attention to the early investors of the company growth, they need to investigate before investment investment is in line with the Proof of Concept that is Proof of Concept model. (hunting cloud network note: is a short of some of the ideas and the realization of the incomplete, to prove its feasibility, demonstrate the principle, its purpose is to verify some concept or theory. Proof of concept is often considered a landmark implementation prototype.)
private equity firms are often based on cash flow structure dominated by later investors and their investment object basically is earning more than $ten million, tax rates, depreciation and amortisation of more than $three million of the company.
so, as a start-up in the early stage, if you are in the vc investors locked door, consider cooperate with private equity investors. Why am I so proposal? In fact, this is because you can take a completely different growth strategies to achieve your dreams.
and before you work with vc, you don’t need to establish a new start-ups. This time, you only need to use encouraged investors to buy one when you need a well-known enterprise within the territory or consolidation mergers and acquisitions such an enterprise. After that, you can get a private equity firm the required income and tax rates, depreciation and amortisation lines.
then you suggest investors are appointed to be responsible for your late enterprise’s financing activities, that is responsible for the company the next step development decisions.
if you are in the early development stages of start-ups and venture capital cooperation, you wouldn’t be so easy to get the 75% ownership. But, you can easily get in the way the ownership of 10%. After all, a company that has the support of private equity investment, such shares for the chief executive of a non founder is very reasonable.
as a result, from the economical point of view, this way has 10% of the ownership is also a very good choice. For example, has 75% of the $four million start-up’s ownership and owns 10% of the $thirty million famous enterprise ownership is the same (besides the company has a strong customer base and revenue streams, also has a much smaller risk).
as an example, the idea of one of my users in their enterprises use the face “to” change the industry technology, now they company could well create billions of dollars worth of business income.
however, if they are not in a hurry to create the company, but decided to raise the wind for creating a startup investment gold, and gradually accumulated to billions of dollars, it takes about ten years. In this time period, other competitors already catch up or those famous old brand enterprises have developed their own new generation of products.
used to raise the wind investment gold this road is time-consuming and slow, because the VCS tend to confuse with similar start-up company market, it is difficult to decide the which one to choose to invest in a startup.
you might as well make up his mind to this time, select the private-equity firms, let them to buy a famous brand enterprise investment, and then you can take this company to use your “magic”, on the basis of their original customers, use your professional knowledge and technology to develop a new generation of products.
if you choose this road, then you don’t need to build a strong sales team, also need not to go to a new relationship, because the old company already provides you with these conditions. Against the existing sales relations, you can at a faster speed will marketed your products, make your company obtain billions of dollars worth of business overnight.
I off the tone speak as if the matter is very easy, in fact, in the choice of private equity investment this road, you will face many difficulties. Private equity investors will ask you the following a similar problem:
1. The entrepreneur ability to manage a large company?
2. You need to buy what a company? Have you ever talked to them about it? Purchase the company need how many money? (suggest you before contact with private equity investors to advance investigation, clear your target and launch strategy)
3. In the process of the acquisition of a lot of things will appear problem, which affect sales performance, so what is your plan, you’ve had a conservative estimate late sales revenue?)
the purpose of these problems is not allow you to think in the business enterprise growth strategy has become short-sighted and focus too much on the current interests. Want to achieve your ultimate goal – to build a big companies within the industry, there are many kinds of way.
to raise private equity than raising venture much easier, especially for those who want to revive its own development company. So, if you can see the essence through the phenomena, you will see a lot of good opportunities for development.
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