1. Ease of obtaining financing
It commonly takes less time to receive funds from an angel investor, as obtaining venture capital funds is a highly rigorous process. Therefore, your business should meet all the investment criteria before being considered by a venture capital firm. The difficulty with angel investors may arise in case your business requires funding from several investors, as they could demand different terms.

2. Investment Size
The range of venture capital funding is larger than the one of angel investors. Angels act alone or in organized groups and invest their own money. Venture capital firms are corporate entities that pool money from a range of investors. Angels typically provide under $1 million, venture capitalists mostly above $1 million.

3. Stage focus
The focus of angel investors is typically the earlier or the seed stage of your start-up company. Venture capital firms focus on different stages of your business. Vc providers are much less likely to invest at the seed stage and they may provide second round financing after angels. Moreover, their purpose is to take your venture to the initial public offering stage and beyond.

4. Industry focus
Angel investors vary in investment areas and may allocate funds to a range of fields, frequently within their areas of expertise. Venture capital firms generally concentrate on emerging sectors such as technology or innovation.

5. Geographic Focus
Both business investors often prefer to invest within the vicinity of their offices. The purpose is to add management value to your company and to easily monitor all their portfolio companies.

6. Expected returns
Both angels and venture capitalists generally expect a high rate of return for their investments. Stereotypically, a venture capitalist may have higher return expectations than an angel investor.

7. Expected Control
Angel investors and vc firms are similar in that they expect a board position and possibly a consulting role. Both invest in return for an ownership stake in your company and for a certain degree of involvement, but venture capital firms will exercise even more control over your company.

8. Support and Expertise
Angel investors will more than likely provide support and advice to the start-up business. Vc firms generally possess greater expertise, as they prefer to lead ventures through successive funding stages.

9. Risk taking
A venture capitalist prefers to invest in a business that will offer security and a high return on investment. An angel is far more likely to be a risk taker and put money into a venture at the riskier seed stage.

10. Motivation
Angel investors are also motivated by the desire to see innovative ideas get off the ground and become successful businesses, whereas venture capitalists are more motivated by profit.

As you need to maximize your chances of obtaining the suitable level of financing for your start-up business and minimize the amount of time spent for that purpose, a Venture Capital Firms, Angel Investors & Private Equity Funds Directory will make a difference.

Author: Len M Williams
Article Source: EzineArticles.com
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You would need an outsider, one who is not part of the team, to eliminate any possible biases that may taint his judgment. Ideally, you should employ someone or even a group of people who can expertly analyze your work. There are companies that specialize in such services wherein the people who run them are either investors themselves or are very familiar with such.

A business plan review by a specialist company is conducted by professionals who know what should go into your documents. They will look into all the important details (every part of a business plan is) including the format used, the presentation, and especially the content. They’ll even tell you if, from their professional point of view, whether it is feasible or not.

Since they are familiar with what investors look for in these presentations, they can make suggestions so that your documents will appear compelling enough. They can propose approaches and strategies that you can take based on the strengths of your plan. They will also point out weaknesses and possible pitfalls that you should either avoid or remedy.

If your documents contain too much unverified information, they’ll point them out. If they lack data that can be crucial to the approval of your proposal, they’ll point those out as well. Any content that is inconsistent with the rest will be called out. They’ll zoom into your team and see if they have sufficient credentials to persuade the small business investors that their money will be in capable hands.

One advantage of having your presentation pass through a business plan review is that, not only will it ensure the accuracy and coherence of your presentation but, it will also make sure that you are prepared to handle the presentation. Having undergone a rigorous process in the review will allow you to gain the ideal mindset as well as the confidence to face your potential small business investors.

A mentor can reduce your learning curve, and save you a tremendous amount of time, effort and money. Your business will be in the black, you will have learned the skills necessary to become a success and your stress levels will be greatly reduced.

So, what exactly is a business mentor? A mentor is someone who teams up with you to teach you what they know. These people are known by many other names, including investors, business angels, and private investors. All of their skills and knowledge are yours for the taking. How many years in university would you need in order to reach the level they’re at? And this would be theoretical knowledge, not practical, hands on.

Mentors or investors can also provide you with start up capital which you may need in order to get your business up and running.

Why would they do this? There are a few reasons. Investors and mentors have been where you are now. They have made their way in the business world, and this is their way of giving back to others. Also, keep in mind that they are investors after all, and they like to see a return on their investments. This means they will do whatever they need to do in order to propel your business forward.

Keep in mind that in order to attract an investor or mentor, they will need to feel that you are committed, self-disciplines and have the true desire to succeed. If you have a strong business idea, in a growth market and have a solid business plan, your chances of working with a qualified investor increase.

It is true that over 95 per cent of businesses fail in the first year. If you start your business off on the right foot by working with a business investor or mentor, you will not become a statistic.

1.) How much money is already invested? Do the client or other individuals/companies have a stake in the business?

Sometimes the difference between getting a loan and getting rejected is as simple as that. Imagine you’re coming to an investor with a fabulous business plan and you need, say, $500 million for a resort and real estate project. In your proposal you clearly state that you do not have one single dime invested yourself (yes, we had a business proposal like this once!). Do you honestly believe an investor is going to give you the time of day? Of course not. You haven’t taken any sort of risk — why should the investor?

In your business plan, it is key to explain fully, in the executive summary and then later on in the financials, just what monies are involved. Okay, so maybe you don’t have any money involved in that resort project, but you DO own the roughly 50 acres of land it will sit upon which is worth maybe $75 million. Good! Mention that in the proposal clearly and accurately, including what kind of land it is, along with a map, some distinguishing features (is it ready for construction, water, pathways, roads, accessibility, etc.) If you have other sorts of assets, something, ANYTHING that can be used as collateral against your loan, make sure it is explained and described.

If you have partners who have chipped in $250,000 for a project worth at the most $2 million, you have a significant edge over other people. Most investors we have dealt with like to see at least 10% of the required funds already in place.

2.) How accurate is the research involved? Does the client know the market, the competitors, and his or her chances?

We can’t begin to tell you how many business plans we have come across that had little or no market analysis or competitive structure. The client had no idea about the target market, the competition he was facing, nor even demographics of the area. He had an exciting product, but it was difficult to ascertain just how much success he was going to have SELLING it.

In many cases, an investor isn’t as interested in the product as he or she is in the product’s success on the market, so a good business plan should have a clear, accurate description of that market. Many things should be included like:

a.) Demographics of your target market and market analysis, with factors such as age, race, income, etc. Think about your average customer walking into your store for your product or service. What are they looking for? What do they look like? How much do they want to spend?

b.) A market analysis that describes the trends and statistics of your potential market. Will your product or service be in high demand for a long time — or will it have limited ‘shelf-life’ on the market, coinciding with a new fad, for example. Will the product or service be affected by shifts in the market? Is this a stable target market with limited shifts taking place, or does the market wildly fluctuate?

c.) Do you know your competitors? What are the similarities and differences between what they sell and what you sell? How are you better than them? How are you inferior to them? (Yes, you need to include that, as much as you don’t want to.)

3.) How realistic are the financial projections?

Be extremely honest. No start-up business makes a profit in its first year, no matter what you are selling. So make sure not to show that in your business plan. Also don’t be too alarmed at the first-year loss. We had a client with a business plan that showed a $400,000 loss against a $2,000,000 loan in his first year of operations and he panicked. Then we explained that he was going to have a loss because his first year of operations would have high expenses as he organized and finished all his preparations for his new company. Investors expect you to have a lousy first year — don’t beat yourself up about it. It’s not the first year that concerns them anyway — they are thinking 3-5 years down the road. If after three years your company isn’t showing a profit, that is when the investors get nervous. After all, why should they put their money into something if your business proposal shows that you won’t be able to pay them back? Luckily for our panicked client, his second year showed a profit of about $30,000 and his Year Three profits would equal $375,000, almost erasing his first year loss. He was going to have a steady 40% increase every year after that.

In many instances, the investor thinks long-term, and so should you. Your financials should explain what is going on, and what will happen. Don’t try to sugar-coat things, per se, but put a healthy spin on a mediocre beginning. Don’t impress the investor with what IS happening — impress them with what is GOING to happen.

4.) Does your proposal look professional?

You’d be surprised how many proposals are overlooked with something as simple as a large ‘BUSINESS PROPOSAL’ on the first page. This is merely common sense. If you want people to take you seriously, show your most professional side. Your proposal should be checked for errors, misspellings, proper formatting, and headings, and have clear, easy-to-read graphics or images. A client tried to convince us to use a dazzling bold red text over a green bar-chart and we hastily explained to him why it’s not a very good idea to ruin the eyes of a potential lender. Include pictures or illustrations, maps, diagrams and other visual aids, if possible. Also, take a good look at your writing. The character Rusty, played by Brad Pitt, in ‘Ocean’s 11′ said it quite well: “Don’t use 7 words when 4 will do.” Talk about your management team, but don’t drone on about how instrumental a part they have played in your life. Talk about the great product you have, but don’t go on about testimonials from other people,(or if you must, include them in the appendix) And don’t be funny. Humor should be left at the doorstep. If you want to be funny, become a stand-up comic. Treat your document and the people reading your document with the utmost respect.

5.) Is the management team solid? Are there good people involved?

Remember that your business is not, and should never be, about you. There have to be some good people involved with you to make it run smoothly. It does not matter what service or product or project is being offered, if you think you can convince an investor you’re a veritable one-man show, you are out of your mind. A client we recently wrote a business proposal for was creating a new mobile-phone service, and amazed us with the list of engineers, technical advisors and IT professionals he had attained. When we saw how the management structure was fully laid out, and how each individual was going to fit in, we knew right away this particular proposal had a good chance to get in the front door.

Investors want to know who is on board, what their job is, their experience in the field you have chosen to represent, and a little of each person’s background and education. A solid management team, with a full layout as to positions, responsibilities and backgrounds, is a sure-fire way to get an investor looking at your proposal a lot more.

6.) Is the exit plan well defined?

Unless your lender is going to get involved with you through a joint-venture, or partner, chances are he or she does not want to stick around with you forever. Investors want to know what you’re offering them later on down the road, when it’s time to cut you loose and count the money you made for them. Some examples of exit plans include:

a. Creating an initial public offering (IPO). If your business has the possibility of going onto the stock exchange later on, and investors can share in dividends, this is very important for them to know from reading your proposal. Let them know how long it will take to get an IPO, and estimate the price per share you foresee, if you’re offering investors a first-buy once the IPO goes public, etc.

b. Buyout. Perhaps your shoes-string business is going so well, your investor is impressed enough to want to buy your company completely for several million dollars. If you want to offer this alternative to long-term investing, make sure you let the investor know the approximate value of the company after a certain number of years. A business valuation report is very helpful in this regard. Let the investor know exactly what he or she might be getting into and if it’s really worth pursuing. If you can do a valuation of the company based upon your projections, it may assist the investor in determining if you are worth the time and effort to invest.

c. Sell the company to others. If your business has the possibility of going up for sale to other interested parties, the investor should know details such as possible buyers, how much they could pay, the value of the business at the point of sale, etc.

d. Pay out of equity. Let’s say Steve wants equity in George’s company and receives 20%. Steve loans George the initial funding and an agreement is made that Steve will own this equity for 10 years. Each year, George will pay Steve 20% of the gross profits. At the end of ten years, if any money is still owed on the loan, which is doubtful, George will pay the equity of 20% and a balloon payment of anything that remains on the loan. All this, of course, must be agreed upon at the outset, so make sure you define this clearly.

7.) How much money do you need and how will it be used?

As weird as it sounds, we have had business proposals come past our desks that explain how much money is needed — but fail to tell us what it’s being used for. An investor will balk at someone who says they need $100 million for an oil well project yet doesn’t explain where all this money is going. Our business proposals include a special heading for Start-up expenses (when dealing with a start-up company, of course), that explains and lists the expenses the investment will cover, and for how long.

If you want to really impress investors, include what we call a “phase plan”. For example, let’s say you want to start that oil well project. In Phase One, you show the investor what you’ll be spending, in this case, for surveys of the land, preparations for drilling, etc. Phase Two could show expenses for drilling equipment, personnel, and construction of the wells. Phase Three could discuss refining procedures expenditures, and so on. You have detailed out a full “shopping list” for the investor, and they not only know what you’re spending, but how it’s being spent, and an estimated time when it will be spent.

8.) How will the money be paid back?

On the heels of exit plans, an investor likes to know how you’re going to pay him or her back. If you can agree on a certain percentage each month, or each year, that is fine. If you want to offer annual equity and a share of profits, that’s great too. But whatever your options are, make sure the investor knows what you’re offering. Detail out all the pay-back options that are available, and order them in importance to you. You might want to think twice if your business has the ability to make $50 million per year, and your investor only gave you $5 million at the beginning, yet you offer a 35% equity every year! Reward your investors, yes, but don’t shower them with untold riches for nothing. A happy investor is always good, but make sure you’re happy too so that your business continues to prosper.

9.) What is the SWOT like?

SWOT stands for Strengths, Weaknesses, Opportunities and Threats — and if you do not know these, you have no business, well, running a business. Your proposal should describe each of these areas accurately and with great detail, at least a few paragraphs for each.

Strengths: What really makes your business stand out? Where does it excel?

Weaknesses: Where does your business need help? Where is it lacking?

Opportunities: What positive trends, actions or events do you see that will have a profound and positive effect on your company’s success?

Threats: What negative trends, actions or events could cause harm to your business — and how will you sail past those rough waters smoothly?

10.) How relevant is the business to our society?

A lot of people will try to tell you that investors really don’t care about this factor, but from our experiences you would not believe the amount of investment firm applications we have seen that ask this exact question. How your business impacts society, whether locally, nationally or world-wide, can have a positive or negative impact on investor interest. If you have a business proposal that offers 4,000 jobs to your city, or will strengthen economical development, or includes environmentally-friendly factors or some sort, your proposal looks that much better. Try to take the time when writing to think about how your project affects others around you. What are the benefits? The long-term effects? The opportunities for others? Every business has the ability to impact society in some way. Informing an investor in detail about how your particular project will do so, tells an investor that you care enough about your project to do the extra research, go the extra mile — and it shows a great deal of determination and heart.

And every investor loves that!

Author: Paul Kraly
Article Source: EzineArticles.com
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A business entrepreneur of a new business needs to write several business plans to attract different people. There are several versions of business plans to do so from mini plans to full length presentation business plans.

The full length presentation business plan, which outlines the business proposal as well as the financial outcome of the business, is what most banks and other lending agencies are interested in.

Banks concentrate most of their attention on the financial strength of the business plans. Although the concept of the new business is important to them, the bottom line is much more significant.

Venture capitalists and angel investors on the other hand go through scores of business proposals every day. While selecting from a pile of business proposals, they are looking for ones that clearly outline the business plan and make an impression fast.

Venture capitalists see hundreds of plans in a year, so they take very little time in examining each of these business plans. Therefore to catch the attention of venture capitalists, the business proposal for a new business needs to be cogent and succinct. Entrepreneur should also highlight the impressive backgrounds of the management team.

Angel investors also go through several business plans in a year and therefore like brevity in the business plan.

Business plans that need to be presented to potential partners should deal with the ownership structure and clearly spell out matters of control and accountability.

Business plans that are presented to suppliers of a new business are completely different from the ones that are submitted to venture capitalists. These business plans tend to focus on cash flow of the new business. Suppliers like to make sure that entrepreneurs are able to meet the monthly payments for the supplies.

Finally, employees like to see business plans that are edited to their understanding. These plans need to show employees in which direction the company is heading and what the future plans for the new business involves.

For more resources about Invest capital or even about small business investment company and especially about business investor please review these links.

Business investors funds usually used to accommodate the additional funds needed. The investor can be a group of private individuals or one individual who invest in a business for a return of a piece of the profits.

There are several kinds of investor funds you can use to take your business to the next level. These types of funds can come from an institution like a bank or a private investor. Not all of the following may apply to you, but you must always weigh all of your options, especially at the early stages of business.

One of most common types of investors funds come from ones family. Asking the help of family members can be something that works. As long as you can provide a decent enough return to your investor and have good relations with your family then you can ask for their help. The most fundamental benefit of asking for investment from your family is that the business will always remain in your family.

Another commonly used source is venture capitalists. Venture capitalists buy into businesses all the time primarily because they are looking for returns on their investments and because they can mobilize and inject large amounts of capital fast.

Keep in mind that they are one of the most stringent investors fund sources when it comes to screening. Typically, venture capitalists deal only deal with businesses that offer very high rates of return, such as those that offer rare products, inventions, new medicines and technology, or cutting-edge research.

Another common source of investor funds are angel investors. These investors are commonly wealthy individuals that are interested to take on a percentage of your profits by providing you with the appropriate capital.

As you can see there are many ways to get some investment in your business. Before you proceed with engaging in negotiations with these people you should keep in mind that you will need to have a solid business plan or else no one will invest.

Author: Gus Smitherson
Article Source: EzineArticles.com
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Business plans essentially outline the vision of the company and predict its financial future. There are several lengths of business plans ranging from full length plans to mini plans. The length of the business plans depends on the number of words required by an entrepreneur to outline the new business proposal and impress upon investors its financial sustainability.

Business plans can be divided into four separate types based on the length and their material. The different plans business plans include working plans, presentation plans and even electronic plans.

Of course, the length of the business plan is not in any way related to the novelty of value of the new business proposal. Although the length does have something to do with the new concept business it has a lot more to do with the presentation style of the entrepreneur.

Mini business plans are usually 10 pages in length. They provide Venture capitalists with a cursory idea of the new business concept, financing needs, marketing plan and financial statements. Mini business plans cannot substitute full length plans and should not be relied solely upon when seeking funding.

Working business plans are used by entrepreneurs to run and operate businesses. Working business plans are usually circulated within employees of the office. As with the miniplan, these business plans are informal in nature. They are intended for comments of a business proposal by employees of the office.

Presentation plans are business plans that are submitted to angel investors and venture capitalists. These are the plans that highlight the new concept business and which are used by entrepreneurs seeking funding. This plan is suitable for showing to bankers, investors and others outside the company.

It is essential for entrepreneurs developing this business plan to be very specific with the details of the plan. Most venture capitalists and angel investors will also expect this business plan to have some information on competitors as well as a strategy to combat the competition.

Business plans are crucial to the success of a business. Often, it is the business plans that decide whether entrepreneurs get startup capital or not.

For more resources about Invest capital or even about small business investment company and especially about business investor please review these links.

Business investors will typically provide funding when you may have been turned down elsewhere or if you don’t have the security to offer banks. They provide a valuable link between friends and family related finance which can’t always provide enough capital, and venture capital firms which won’t fund “modest” amounts.

Investors have a keen eye and are always on the lookout to spot the next big investment opportunity. Their primary goal is to maximise their return, so won’t be adverse to risk or taking on a more hands-on approach. Because they’ve got a share of the company and invested their own money into it, they’re motivated to make it succeed and will provide a lot more help and support than if finance was sourced from traditional avenues.

They’ll often bring their own knowledge, experience and contacts to help the business, all of which can be invaluable to its success. Many will have secured their fortune from their own business ventures, so will have a wealth of experience to offer.

Unlike a loan from a bank, finance from a private business investor can’t be repaid by a specific date or have interest charged on it. It’s usually paid in dividends, the amount of which will depend on the profitability of the business.

Business investors are looking for long-term investments that offer a high rate of return. Because they bring knowledge and experience as well as money they can be the ideal choice of raising capital, and small business ventures would be wise to consider them.

Who are angel investors?

Angel investors are veteran businessmen who run successful businesses of their own. They help out entrepreneurs by investing in their businesses. The assistance is not free of cost, though. The angel investor will own a percentage of the business that he/ she invests into. Obviously, he/ she will also get to keep the profit made from his/ her percentage of the business. However, it is a very small price to pay, considering the benefit your business can get from an angel investor. You should always approach angel investors who live near the location of your business. This is because angel investors always prefer investing in businesses that operate near their homes or offices, so that they can visit the place often. Typically, the distance between the business investor’s home or office and the location of the business in which he/ she has invested should not be more than 50 miles.

How to find an angel investor?

There are some agencies that can help you to get in touch with an angel investor. However, the prices for their services are often sky-high, and almost impossible for budding entrepreneurs to bear. There are solutions to this problem, though. There are many websites on the internet that can help you find angel investors looking for new investment opportunities. One of the best websites in this regard is entrepreneurinvestornetwork.com.au, which aims at uniting angel investors looking for business investments in Australia with budding entrepreneurs in the country. Log on to the website today. You will not be disappointed.