Attracting corporate investors
Corporate investment is a facet of corporate finance that deals with long-term investment rather than immediate managerial needs, and it can be a boon to the development of your small business. However, corporate investors can be difficult to draw to your venture. In order to attract financial investment, you will have to appeal to the business and personal interests of the investor – find out what business investors are looking for and learn how to adapt to that ideal.
Although your business design may be shrewd and distinctive, investors follow their own criteria to evaluate a business investment opportunity. Some investors operate within certain areas of industry, and some are only interested in specific types of projects. Either investment companies or private investors can satisfy your funding needs, and there are online databases to explore that can match the interests of a specific investor with those of a small business.
"Angel" investors are great sources for loans or grants, as many are successful entrepreneurs who want to help other entrepreneurs succeed. Since angel investors invest money to help your business, they will expect high returns; although you will sidestep monthly interest payments, you will have to repay a hefty sum when your business starts to make a profit. Also, most angel investors expect to take a seat on the company's board of directors and will require frequent financial reports – it is important to decide how much control of your business you are willing to give up before you confirm your relationship with an angel investor.
In general, corporate investors determine the value of a given project by plugging your financial information into a formula that predicts how risky and how potentially successful your business is. Although this is a much more mechanical process than that you would experience with an angel investor, it does allow you to keep a higher degree of managerial independence.
Drawing Corporate Investment
One way to gain capital to expand your business is by selling corporate bonds to other companies, which will bring you money quickly, in exchange for your promise to pay the amount back in full at a future date, and to pay interest in the meantime. But as with corporate credit lines, you may have to attach specific assets as collateral to satisfy the investor.
To attract private or public corporate investors, you will need to begin with a well-constructed business plan that specifies the appealing financial aspects of your business. Although it will be important to present records of your company's present worth, prospective value will be more important to the investor: use the help of an accountant, a financial consultant and perhaps a lawyer to compile a persuasive presentation.