Investor financing differs from bank financing in a variety of ways. While bank loans are secured by a borrower’s promise to pay back a loan, investor financing is based solely on the value of the assets being financed. This differs from debt financing, which relies on the creditworthiness of a borrower to obtain credit. This means that angel investors, instead of being interested in a borrower’s ability to repay a loan, are interested primarily in the financial attractiveness of an enterprise.
Unlike traditional bank loans, investor financing typically does not require a down payment or any sort of collateral. Instead, you can finance your enterprise solely by attracting a group of private investors or an investor with money. Typically, the investors will invest money in order to finance the enterprise and, in return, they will get a percentage of equity in the finished business. However, there are a few factors you should take into consideration before you approach an investor regarding this type of financing.
Before you approach an investor, you should be able to identify one or more people who are likely to be your best prospects for obtaining capital. This includes your current boss, if you have one, a trusted advisor, and business partners. It is also important that you have a good exit strategy. In order to draw the interest of potential investors, your exit strategy should include a description of how you intend to use the equity stake. For example, if you plan to use the investment to run a discount hotel, you should highlight that in your investor communication.
If you are still employed at your current job, you may have the option of approaching your boss about going into business for yourself. Many potential investors, however, do not like the idea of an entrepreneur starting his or her own business. In fact, most investors prefer an entrepreneur have one major person – the decision-making authority – in place. Therefore, if you do not yet have a boss, as well as a trusted advisor, approaching your boss to seek capital financing for your start-up may be a good idea.
Once you have identified people who are likely to be interested in putting money into your venture, you should try to make it easy for them to provide you with the equity stake that you need. This means that you should provide them with as much information about your company as possible. Keep your potential investors up-to-date with news about the company and the activities of your business. Include information on what your plans are for the future and how your decisions are made. By providing this information, you are showing your decision-making authority that you are serious about your start-up and are confident about your ability to manage the business.
Another way to attract investor attention is to actively participate in events related to your start-up. Attend trade shows, conventions and other networking events. These events are a great way to advertise your company and gain the respect and credibility of other successful small businesses that have used this method to raise funds. As part of this effort, you should actively pursue investor attention by inviting prominent people into your events who are willing to invest in your start-up. You may have to pay for their attendance, but this will still be less than what it would cost for you to pay for legal fees and start-up costs if you were to do it without outside help.
One of the most common ways to get investor attention for your small business is to offer deals that are attractive to investors. In many cases, successful filmmakers are able to raise funds from investors by simply offering a deal that is too good to pass up. For example, you may have heard of people selling “starters” or “studio packages” to investors. These packages usually contain a number of standard features, which are designed to attract investors. In order to attract film investors, you can do the same by offering a number of high quality products that would appeal to investors.
It is important to understand that you cannot sell stock in a company like an entity or corporation. As a result, it is unnecessary to use the procedures that you would ordinarily follow if you were buying stock from a company. This is why it is vital to consult with a qualified attorney before you begin seeking any film funding. The process of obtaining a PPM in California can often be complex, and it is important to fully understand the legal requirements that must be met before proceeding.
