If you are an entrepreneur looking to expand your business operations, you might be in search of capital. You might go to friends and family if you are only looking for small amounts, you might go to a bank if securities are available in the business or you might be looking to attract a financial investor.
If you got to read our last article – Smart Money Is Attracted to Smart Companies- you might already know that investment funds – the so-called financial investors – are grouped into categories based on seniority of targets they consider investing in.
The purpose of investment funds is to multiply the money of their investors. Financial investors have a mindset that is a long-term game. They take on some level of risk – by putting the money in your hands – to achieve a return; but you need to show commitment and real, high growth potential, as well.
Which are the key ingredients of Smart Money Game?
No two investments are alike, but an important prerequisite is the ability of a business to grow in value on medium term – typically from 3 to 5 years.
There are a few common ingredients that any financial investor will look for, as a foundation for future growth:
PEOPLE
- Visionary founders, with unquestionable reputation and integrity;
- Experienced managers able to execute the growth strategy;
PRODUCT
- Outstanding product or service;
PERFORMANCE
- Fast-growing sector;
- Commercial, operational and financial performance;
- Proven business models;
POSITION
- Top market position;
- Clear means to maintain and grow the business in existing or new markets.
As an Entrepreneur, think for a second if you would like to enter this Game. Do you believe it is a great opportunity to expand your business or are there more things that you need to know before making this step?
Do you need smart money for your company? – find out in our next article when is best to use capital from financial investors.
You might enjoy some of our other articles, too: How and why to be an investor, Why choose to invest in anything in the first place, or Why is money attracted to smart companies.
Ruxandra is an M&A expert with 20+ years of experience in investments field.
Her professional expertise has been built in a large number of projects – covering M&A, capital raising, debt raising, financial & operational restructurings and turnaround situations – serving mid-size and large companies.
