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Types of Business Plan Packages


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Understanding Equity & Venture Capital

Equity capital or financing is money raised by a business in exchange for a share of ownership in the company. Ownership is represented by owning shares of stock outright or having the right to convert other financial instruments into stock in a private company. Two key sources of equity capital for new and emerging businesses are angel investors and venture capital firms.

Typically, angel capital and venture capital investors provide capital unsecured by assets to young, private companies with the potential for rapid growth. Such investing covers most industries and is appropriate for businesses through the range of developmental stages. Investing in new or very early companies inherently carries a high degree of risk. But venture capital is long term or “patient capital” that allows companies the time to mature into profitable organizations.

Non-Accredited Investors

Thanks, to Title III of the Jobs Act that was signed into law by President Obama, on April 5, 2012, that allowed non-accredited investors to invest in early stage business ventures for the first times, since the 1930s. Traditionally you had to be non-accredited investors with a net-worth over $1 million dollars to participate in private equity investing. The Business Model Plan will help investors and others evaluate the capability of management and their future growth potential. A Business Model Plan is a detail documents that maybe used by both Small & Medium Enterprises (SMEs), as well as non-accredited investors that are new to private equity investing.

Angel Investors & Venture Capitalists

Business “angels” are high net worth individual investors who seek high returns through private investments in start-up companies. Private investors generally are a diverse and dispersed population who made their wealth through a variety of sources. But the typical business angels are often former entrepreneurs or executives who cashed out and retired early from ventures that they started and grew into successful businesses. These self-made investors share many common characteristics:

·    They seek companies with high growth potentials, strong management teams, and solid business plans to aid the angels in assessing the company’s value. (Many seed or start ups may not have a fully developed management team, but have identified key positions.)  They typically invest in ventures involved in industries or technologies with which they are personally familiar.

·   They often co-invest with trusted friends and business associates. In these situations, there is usually one influential lead investor that judgment is trusted by the rest of the group of angels.