Investment & Business Services
Getting the Money You Need to Finance Your Business
If you are starting your own business you will need money. Depending on your business idea you might not have the necessary funds to realize your idea.
Most people think that they need to get a loan from a bank to get started. They soon realize that banks are not willing to lend money without any collateral.
Another way to finance your business idea is to get money from private investors. We have seen a lot of people with great business ideas how struggled to get money from investors. The problem was often that they either had no clear strategy on how someone could invest into their business, that the investor would take over too much of the business or that there was no clear exit strategy for the investor to be motivated enough to invest in the first place.
The solution is called “private equity”. A business should be set up from the start in such a manner that there is a structure and plan for investors to be able to buy shares of the company. There needs to be a clear share structure in place so that the owner of the business does not lose control but at the same time allows investors to participate.
Let me give you an example: The founding members of the business have 20 million shares in total. They have decided to sell an additional 10 million shares to private investors for $0.50 per share. This means that the company would get $5 million into their treasury. This money can be used to develop the business, pay salaries and be used for other business related things.
The investor needs to have a motivation to invest into a company. But more importantly he needs to know when he can expect to get his investment back.
Therefore you need to plan an IPO for your company. Assuming that you are able to list your shares with an initial price of $1.00 per share your investors would double their money. This will give them the necessary motivation to invest in the first place.
Your job is to build the business and create revenues. A typical time frame for the investment can be anywhere from one to three years. During that time you need to develop your business in such a way that the number of shares multiplied by the share price will be equal to the value of the company in the market.
Example: The company has issued 30 million shares in total (20 million shares from the founders and 10 million shares from investors). If your share price is $1.00 per share the market capitalization of the company is $30 million. Depending on the industry the P/E ratio (price per earnings) is 15. In that case you would have to have annual earnings of $2 million per year to have a fair valuation (15 x $2 million = $30 million market capitalization).
By starting out with $5 million it is possible to create business that will eventually have earning in excess of $2 million per year.
Some businesses have such a great future potential that the current stock price is not in relation to the current earnings of a company but investors are still willing to pay for it.
By creating a company the right way from the start, getting investors and then listing the company on an exchange can be the fastest way for you to become successful.
When you think about the economy and all the big companies in the world you will soon come to the realization that those companies were only able to grow this big because of investors who believed and invested into their business.
If you want to expand and grow quickly, we can help you with the following things:
- Incorporation of a company
- Creating the right share structure for your company
- Advising you on how to raise money and get investors
- Helping you with the listing of your company
- Getting all the professional advisors like lawyers, accountants, auditors, market makers, brokers, etc. involved
- Advising you on financing possibilities
- Advising you on marketing your company in the stock market
- Advising you on all corporate related issues
Request More Information
Please fill out this information request form and we will contact you shortly. Depending on the services you require the cost will vary accordingly. We will send you a detailed price list with all the services included.
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