Business Growth - Seed and upwards
There are a number of key business growth milestones in the life of a business venture, not all relate to every case but Investment can be required at various stages of the business life cycle. It is important to consider your business growth strategy as your business could realise it’s true potential with the right level of investment at the right business growth stage.
Seed
The Seed stage is an early stage investment. You may well require finance for the development of a business concept. For technology and product related ventures captital is often needed to develop prototypes. Also any funding required to perform initial research is considered a Seed stage investment.
Seed funding can sometimes be difficult to obtain (perhaps not as difficult for Bio Technology and medical related sectors). It is often a case for alternative funding and initial personal investment. You can then go to an investor with a further developed business strategy and therefore you are in a better possition for negotiation.
Start-up
Start-up stage investment is often required for product development and initial marketing. Companies in the process of being set up and companies who have been in business for a short time often require investment at this stage to aid bringing a product or service to market.
Early stage
There is often investment required at Early stage. Usuealy the product or service offering is fully developed and finance is required to start commercial manufacturing or drive initial sales. Businesses at early stage are often not yet generating profits.
Development capital
Development Capital, often referred to as “Expansion” stage investment is avaiable to established businesses who require funds to finance increased production capacity, product development and advancement. To ensure steady business growth, investment to provide additional working capital, and/or marketing spend is often called for.
Bridge financing
If a company is looking to float witin a year, short term venture captial funding is often available this is reffered to as Bridge financing, as in bridging the gap between current business possition and being floatation ready.
Refinancing business debt
As the name suggests there are Investors willing to consolidiate existing debts, i.e. Bank loans, overdrafts e.t.c in return for equity share holding in the business
Rescue - Turnaround
This kind of emergency funding is sometimes required to rescue a business from the prospect of liquidation. An investor willing to help turnaround a business will often act as “Trouble Shooter” and help structure a rescue plan.
MBO - Management buy-out
Funds can be avaialble to enable an exisiting management team to aquire the exisiting business.
MBI - Management buy-in
Investment is often available to allow an external management team to buy in to an existing business. This form of investment is often attractive to potential investors.
IBO - Institutional buy-out
This is a large Investment where by the investor effectively purchases the business whilst the exisitng buiness owner retains a certain stake in the business.
LBU - Leveraged build-up
This type of investment stage is pitched to the investor as an oppourtunity to aquire a particular business where there are other relevant busineses also up for aquisition in the trade market. Therefore developing an enlarged business group of complimentorary business who trade on the back (leverage) of each other.
Although this is a complex proposal to structure if done correctly it can be very lucrative to an Entrepreneur by adding increased value to your indivdual proposition.
Mezzanine finance
There is sometimes a requirment for loan finance in between equity and secured debt. This type of inward investment is often provided as part of a private equity package and can aid business growth.
Public to private
Sometrmes external funding is necessary to take a quoted company into private ownership.
Purchase of quoted shares
There are some investors willing to purchase stakes and/or acquire shares in quoted companies in return for investment. This isn’t as attractive as other investments to potential investors becuase Business Angels and Venture Captialists tend to opt for higher risk, higher return investments. It does have clear business growth advantages for the business.
Roll-out
Roll-out Investment tends to be primeraly associated with the retail sector. This Roll-out funding is available to business looking at expanding through introduction of new product lines or services into the marketplace.
Targeting your proposal to the right investors
The Edge Venture Pitching system enables Entrepreneuars and buiness owners to specify which stage of investment they are looking for. The potential investors can then narrow down their search and focus in on there particular specialism.
You may find a Business Angel partiularily interested in start-up and early stage investment oppourtunities but not at all interested in IBO’s (Instituitional Buy-outs).
On the flip side there may be a VC investor desperately seeking LBO (Leveraged Build-up) oppourtunities and they have set up SMS alerts to be notified when suitable candiditates register on the system.
Enjoy the power of this sniper targeted approach to Entrepreneur to Investor match-making.
