Methods of investing in an existing business
Posted: Sun Jan 19, 2025 6:38 am
Sometimes entrepreneurs need investments in a ready-made business. This happens if the company wants to scale up and take a larger market share than it currently has. There are several basic methods for attracting financial resources in such a situation.
Ways to raise investment at later stages:
Bank financing
This means loans at specific interest rates and with a specific repayment schedule. Financial institutions agree to provide financial support only to those enterprises that have proven their solvency. Banks are conservative and want to minimize the risks of investing in business.
Typically, such financial stockholder data package institutions evaluate the duration of the enterprise's existence, the stability of the cash flow, the availability of valuable property at the firm's disposal, as well as the borrower's ability to attract a guarantor. The chances of obtaining a loan increase if the entrepreneur uses other products of this bank, for example, a current account, salary cards for his employees, deposits, etc.
Methods of investing in an existing business
Investment funds and private equity funds
Such organizations rarely invest in start-ups. They usually offer investments in businesses that have been in production for a long time and are generating stable income. The profit of private equity funds consists of the subsequent resale of their shares to other companies or people, or the placement of company shares on the stock exchange (during an IPO).
These organizations have their own platforms on the Internet, where you can get acquainted with all the information you are interested in. It is quite easy to find them. When making an investment decision, funds of this type integrate the object into the scheme of their other investments in order to minimize the risks of losses.
Strategic investors
In this case, financial support is provided by large companies and corporations. Before investing in a business, the company is assessed by financial analysts who predict the effectiveness of the future transaction.
Examples of strategic investors include companies such as Yandex, Sber, VK, MTS. They acquire a share in your enterprise to increase their own capacity. In other words, corporations act with the aim of synergistic effect, absorbing small enterprises or buying out the main block of shares in them. Usually, such investors themselves find entrepreneurs who interest them in their activities.
Ways to raise investment at later stages:
Bank financing
This means loans at specific interest rates and with a specific repayment schedule. Financial institutions agree to provide financial support only to those enterprises that have proven their solvency. Banks are conservative and want to minimize the risks of investing in business.
Typically, such financial stockholder data package institutions evaluate the duration of the enterprise's existence, the stability of the cash flow, the availability of valuable property at the firm's disposal, as well as the borrower's ability to attract a guarantor. The chances of obtaining a loan increase if the entrepreneur uses other products of this bank, for example, a current account, salary cards for his employees, deposits, etc.
Methods of investing in an existing business
Investment funds and private equity funds
Such organizations rarely invest in start-ups. They usually offer investments in businesses that have been in production for a long time and are generating stable income. The profit of private equity funds consists of the subsequent resale of their shares to other companies or people, or the placement of company shares on the stock exchange (during an IPO).
These organizations have their own platforms on the Internet, where you can get acquainted with all the information you are interested in. It is quite easy to find them. When making an investment decision, funds of this type integrate the object into the scheme of their other investments in order to minimize the risks of losses.
Strategic investors
In this case, financial support is provided by large companies and corporations. Before investing in a business, the company is assessed by financial analysts who predict the effectiveness of the future transaction.
Examples of strategic investors include companies such as Yandex, Sber, VK, MTS. They acquire a share in your enterprise to increase their own capacity. In other words, corporations act with the aim of synergistic effect, absorbing small enterprises or buying out the main block of shares in them. Usually, such investors themselves find entrepreneurs who interest them in their activities.