Taking Your Company Public

Posted on by admin

Many people refer to the process of finding the right broker dealer to take their company public as a “beauty contest.” This is largely because there are a number of considerations that go into making the decision as to the right broker-dealer to handle an initial public offering.

building-290332_640

Initial public offerings require an in-depth underwriting process. Underwriting firms are tasked with not only verifying the company has met all the requirements under the Securities and Exchange rules, but, they are also financially responsible for whatever amount of stock they believe the offering will sell during the public offering phase. The first step you must make before you agree on a broker dealer for this relationship is verifying the following:
Continue reading →

What Are Angel Investors And How Do They Differ From Venture Capitalists?

Posted on by admin

Early-stage startup companies have big challenges ahead when it comes to making their business a success. You already have the concept. You may even have an eager customer base ready to buy the products. What you may still need is the seed money to get operations off the ground. Without the proper funding, success may be unattainable. It is often important in these early stages for a startup company to for angel investors to help get things moving in the right direction.

What are Angel Investors?

An angel investor is an entrepreneur much like yourself. They have had the previous experience of owning and operating a successful business until they became a very high net-worth person. They are ready to invest their own funds into a successful startup company to help you build and grow your operations.

Since they understand the high risks of investing in early-stage startups, angel investors seek companies that hold a certain criteria. You, as the business owner, have to be ready to build up the business until the time comes to exit through a merger or sale. This process is how the angel investor gets a return on their investment.

In the past, many angel investors would try to stick with companies close to home, but the advent of the Internet has made it easier to invest globally. Websites like BrokerDealer.com are part of this revolution. Ideally, angel investors are looking for a startup company that promises high returns, scalability to its operations, strong management, and a unique product or service that will attract a large market for an extended period of time.

What Is the Difference Between an Angel Investor and a Venture Capitalist?

You may be wondering what the difference is between an angel investor and a venture capitalist. Both are entrepreneurs who invest in startups that promise high returns. Yet there are some major differences between the two of them.

While an angel investor will give your business the seed money at the very early stages of your operations, venture capitalists usually wait until the startup has a bit more groundwork underneath it and is beginning to produce revenue. Angel investors also often invest using their own funds. Venture capitalists, on the other hand, will use other investment sources such as foundations, pension funds, and insurance companies.

Another major difference will be the amount of invested money given to you. Angel investors normally stick with investing smaller amounts ranging up to $100,000. A venture capitalist may invest $2 million or more into your startup. Some angel investors may work in entrepreneurial organizations called angel groups that will invest from $200,000 up to $2 million in a startup based on the size of the group.

Understanding angel investors and how they operate can help you decide if they are the ideal investment partner for your startup. If you are running a fledgling startup and you don’t mind giving up some ownership of their business, have a high-demand product or service, expect large revenues in the coming years, and have an exit plan in place; then seeking an angel investor may be the answer to your company’s financial needs.

 

Sources: http://www.forbes.com/sites/tanyaprive/2014/03/11/the-most-common-question-that-new-angel-investors-ask-2/

Microsoft Ventures GM: “We’ve hit the peak of the bubble”

Posted on by admin

At the 2014 Cloud Factory Conference last week in Alberta, Microsoft Ventures general manager Rahul Sood warned that companies hoping to cash in quickly on a multibillion dollar acquisition in the wake of Facebook’s purchase of WhatsApp may need to re-think their strategy. As VentureBeat reported, he wasn’t criticizing Facebook’s pricey acquisition of WhatsApp as much as he was criticizing the rush of copycat companies aiming to be snapped up in the frantic Silicon Valley spending spree that followed. “You know you’re in a bubble when you see people throwing money at dogsh*t companies,” he bluntly elaborated. Sood’s primary point was that Facebook’s acquisition of Whatsapp is likely the peak of these acquisitions and going forward companies will need to position themselves smartly in order to remain attractive to potential buyers.

He later explained in a follow-up post online that he was not criticizing Facebook’s business decision, but rather warning that people should not bank simply on “investor exuberance” when it comes to building a solid foundation for a growing company. His message to investors was to avoid buying into fancy-sounding buzzwords that get thrown around so often in order to dress up an inferior product. On both sides of the negotiating table, young companies and investors alike can do themselves big favors by simply doing their homework.

Sood had altogether kinder words for cloud technology, mentioning that small companies can now accelerate growth and exit faster than ever before. He finished his follow-up post online by mentioning “if you are looking to invest, look to reputable accelerators, investors and angels.” We couldn’t agree more, which is why we are passionate about the work we do here at Broker Dealer. Sign up with us today to gain access to our incredible network of broker dealers, venture capitalists, angel investors, and more!

H/T to VentureBeat

Five Tips For Increasing Business Valuation

Posted on by admin

Any entrepreneurially minded business owner knows that increasing the valuation of a company can yield a lucrative path to wealth creation in the future. In fact, the pay-off can be big. According to Forbes, 4 out of 5 people with a net worth of $5 million or more are entrepreneurs who grew and eventually sold their own businesses. Even if you aren’t planning to sell your business anytime soon, chances are that you are constantly looking for ways to grow and establish your company. We’ve gathered our top tips for increasing business valuation so that one day, a would-be buyer could be more confident in making you an attractive cash offer.

 

1. Develop Recurring Revenue

A recurring revenue stream may not be possible for every business model, but it can be a powerful tool in the arsenal of an owner looking to sell. Purchase renewals help guarantee that a business will continue to generate revenue long after an acquisition or merger is complete. Returning customers create a strong foundation on which a new owner can continue to build a business. There are several ways of creating recurring revenue streams, with some more profitable than others. Whether you sell a consumable product, encourage automatic renewals and monthly billing, or have your customers locked into long-term contracts, recurring revenue can significantly boost business valuation in the eyes of a potential buyer.

2. Embrace Change and Diversity

Diversification is an important strategy for wealth-building, and that strategy applies to business growth too. Your client base should always be growing — not shrinking. If your targeted demographic is aging and you aren’t attracting new customers, your valuation could suffer. Look for ways to broaden your marketing efforts to reach new clients and offer diverse products or solutions that appeal to a wider market.

3. Get Your Affairs in Order

Paperwork is a headache for any business owner, but disorganized or incomplete paperwork can be a nightmare. Buyers will put greater value on a business that has its affairs in order, files updated, and records organized. Start by moving from paper filing to a digitally based system for easy reference. Make sure any debts and financial obligations are under clear terms with fixed arrangements. Consider long-term expansion needs when signing new leases, and document all of your business’s finances in detail to show a potential buyer evidence of profit and growth over time.

4. Protect Business Relationships

Every successful business is built on relationships. It is impossible to start up and operate a business without customers, not to mention valuable professional connections. Learn to nurture all of your business relationships — not just the ones that seem to have the most value at the time. Maintain contact, send out birthday and thank you cards, and become active in your local community. Most importantly, ensure that these business relationships run deep into your company’s infrastructure and do not begin and end with you.

5. Create Internal Successors

One of the most difficult challenges that a business owner will face is creating a solid internal structure that will maintain the company’s viability in the owner’s absence. Potential buyers need to know that business will continue as usual despite a previous owner’s departure. Depending on the size and type of business you own, it can take many years to find and train managers and employees who are capable of operating your business without you. Adopt a policy of internal promotion where possible to raise your employee retention rate and avoid having to train top-level employees in your company’s vision and culture. Learn to delegate; and make a goal of being as hands-off as possible by the time you are ready to sell.

 

Sources: http://www.forbes.com/sites/lawtonursrey/2014/03/18/before-you-launch-your-crowdfunding-campaign-read-this/