There are two types of equity investments:
Public Stock: holding shares of publicly traded company. The company itself can sell more shares to raise further money.
Private Equity: covers a broad range of investments such as venture capital, leveraged buyout, growth capital and mezzanine capital
Guidelines that a entrepreneur should follow when selecting a venture capitalist are:
- Scrutinize your business with a critical eye
- Beef up management
- Keep a high profile so the VC’s will visit
- Target the search
- Keep a lookout
- Investigate possible venture partners
A single-hit is a business that does not last long in the market.
A home-run business is one that has a good foundation and starts off strong and continues to grow.
There are four factors that a banker looks for before providing a corporate loan, which is called the four C’s:
- Character – the person carries traits such as talent, reliability, and honesty.
- Cash Flow – to cover debt service must be available throughout the term of the loan.
- Collateral – must pledge a specific piece of property to secure the loan.
- Contribution – by the entrepreneur towards the funding requirement.
