Securing funding for startups through venture capitalism

 

According to Scott Tominaga of PartnersAdmin LLC, for each startup that gains needed venture capital, most fundraising plans, for one reason or another, fail. Sometimes, it's just pure bad luck, but other times, it can be controlled.

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Scott Tominaga revisits a previous topic for today's blog and shares some steps startup owners can take to earn trust and credibility from potential venture capitalists.

1. Know which venture funding best fits the company's goal.

People have to remember that expert venture capitalists are not interested in linear growth, expecting no less than a return that's several times their initial capital below a span of seven years. Startup owners have to be candid about their business objectives and build their plans around clear-cut tactics to achieve quick growth. That way, they can present these convincingly as most VCs immediately recognize future failure when they see it.

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2. First impressions are as important as anything else.

When facing VCs, startup owners need to introduce themselves properly. Scott Tominaga notes that one of the best and most effective methods of introduction is through the investor's portfolio's founder, as this would have already earned the investor's trust. Startup founders can also opt to be introduced by a client who genuinely believes in the company's product or service and has the credibility to convince VCs that what the company is offering is very much needed by its target market.

Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC. He has almost two decades of experience in the hedge fund and financial services industry. For more insights on the financial and alternative fund industry, visit this blog.

Some unique characteristics of a hedge fund

 

As the founder of PartnersAdmin, Scott Tominaga has a good vantage point of what goes on in the world of finance and investments. He generously shares his knowledge through a set of blogs discussing topics in his industry. This one discusses hedge funds and their characteristics.

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1. A hedge fund is a type of fund that is not regulated by the Securities and Exchange Comission (SEC). One of the consequences of this is that hedge funds cannot be marketed or promoted through any form of mass media. This is why you don’t see any newspaper, magazine, or TV commercial that advertises hedge funds or opportunities to invest in them, shares Scott Tominaga. This simply means that the SEC does not have to watch your back when you make these investments.

2. A hedge fund cannot take money from the public. There are many investment models out there that are often described as publicly offered. That is not the case in hedge funds. There are really no firm rules when it comes to hedge funds, but there are discriminators at work, which can profile its potential clientele. Typically, hedge fund investors are accredited investors, meaning that they have a certain net worth or income in order to get into this type of unregulated arrangement, notes Scott Tominaga. 

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3. In contrast with mutual funds, wherein the fund manager is incentivized with a percentage of the asset involved in the investment, thereby motivating him to pursue a bigger investment from the client, hedge funds are more lucrative. A hedge fund, a relatively more actively managed fund, gives the fund manager the opportunity to get larger fees as well as the profits of the investment, even as high as 20% of the returns.

With almost two decades’ experience in the industry Scott Tominaga he has played primary roles in the establishment of several operational infrastructures, successfully interfacing with fund managers and professional service providers to establish efficient and transparent operations and reporting structures. Discover more about his work by visiting this page.

How to invest in your local economy

 

With every state affected by the coronavirus outbreak, it’s no surprise that several localities were hit harder than others. In rural locations where jobs are scarce, businesses shutting down for health reasons are crippling the local economy. Not everyone can just work from home or live off savings for a year. There is a reason why people across the country were protesting to reopen businesses. According to Scott Tominaga, the best way for a community to thrive once more is by pouring money into local businesses. Here are some ways you can help your local economy. 

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Create a local investor network

On your own, it might be impossible to save your local economy. This is why you should look for the cavalry to back you up. Finding several investors who can direct some of their money to help a failing business or help a business reopen takes the load off your shoulders. As a group, you can choose which establishments to help, help them, and be part of the business itself.

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Crowdfunding

The internet is a wonderful thing. You can create a crowdfunding page, upload a video, and save a business in a matter of days if you are that lucky. Thousands of people constantly browse crowdfunding pages, ready to give a helping hand, so don’t shy away from programs such as these.

Keep spending locally

It takes a while before cash circulates in a small community. Support every business, even if it’s not cost-effective. Your local grocer’s potatoes are $2 more expensive than the one in the next county? Pay the difference. Are you planning on replacing your AC at a mall in the next town? Ask your local handyman if they can fix your AC. Scott Tominaga believes that the best way to revive a local economy is through grassroots spending by locals.

Scott Tominaga has almost two decades of experience in the hedge fund and financial services industry. He has an extensive understanding of the middle and back office, accounting, compliance, and administrative functions within financial services firms. Visit this page for similar reads.

Investment and beyond: A look at yield management

 

Scott Tominaga from PartnersAdmin LLC continues to share with readers everywhere some vital information about investment and business. In today’s blog, he focuses on the hospitality and tourism sectors as both industries have been dealing with a lot of changes in the past decade because of the development of connectivity and the constant globalization.

Before the pandemic hit, the hospitality and tourism industries contributed almost 10 percent of the total economic output, and supported almost 10 percent of jobs in the entire world economy. This is why as far as investments go, Scott Tominaga believes it to be a wise choice. 

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However, for people looking to invest in these industries, it is crucial to their success that they learn about yield management.

Yield management, simply put, is the sale of the right asset, which in this case can be accommodations such as rooms, to the right client at the right time. Yield management can tremendously improve market segmentation through competitive pricing. The method also decreases the incidents of pricing mistakes, and creates a clearer picture of what customers want and expect. 

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In yield management strategies, early booking is pushed, and the prices of rooms increase over time. This justifies higher prices for late bookings and higher profits for investors. People who are well-versed in yield management such as Scott Tominaga know that factors such as customer demands and budgets are constantly changing, hence the need for dynamic pricing.

Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC. He has almost two decades of experience in the hedge fund and financial services industry. His company was established in 2008 with the intent to provide quality, outsourced solution to the dynamic back office needs of alternative fund industry. To know more about Scott and PartnersAdmin LLC, click here.

How to pitch investment proposals like an expert

With his years of experience in a number of industries, Scott Tominaga has amassed a wealth of knowledge which he shares with readers through his series of blogs. His topics are as varied as they are helpful, and are aimed to help people make well-informed decisions when it comes to matters of investment, business, and everything in between.

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In today’s blog, Scott focuses on the all-important investment pitch. 

Before anything though, people need to know that the chance of having a pitch rejected is pretty high and that is a normal thing. However, there are ways to increase the chances of, at the very least, getting potential investors interested.

Tip 1: Be thorough, but do not be boring.

Experienced professionals will be the first to say that while delivering a pitch, never assume that potential investors know what the proposed product or service is all about. So, be thorough and cover everything. Having said that, do not bore the audience with a barrage of details. Be concise and straight to the point. Also, engage the audience. Yes, explain the idea but also talk to potential investors like they are part of the presentation.

Tip 2: Be mindful of being respectful.

Scott Tominaga explains that while being respectful and courteous is a given, some people who go through it appear arrogant without intending to be so. Whether it’s the nerves getting to them, or the fact they believe in their idea so much, or other reasons, Scott reminds everyone to keep themselves in check. Potential investors are seldom enamored by presenters who are full of themselves. Be humble.

Scott Tominaga has played primary roles in the establishment of several operational infrastructures, successfully interfacing with fund managers and professional service providers to establish efficient and transparent operations and reporting structures. For related reads, click here.

Five essential differences between private equity and venture capital.

Private equity and venture capital are often confused because of the way both of them refer to firms that invest in companies and exit through selling investments in equity financing, including initial public offerings (IPOs). But the specifics paint a whole world of difference between the two—here are five to remember:

The companies they buy

Private equity firms largely buy mature, established companies. These might not be generating enough profits or are regressing, and they are bought in order to increase their revenues. On the other hand, venture capital firms put their money into startups that demonstrate high growth potential. While PE firms buy companies across all industries, VC firms are focused on technology, biotech, and clean tech investments.

Percentage acquired

PE firms nearly always buy 100 percent of a company, while VC firms acquire only a minority stake or less than 50 percent. While the former seeks to have total control of the firm after a buyout, the latter usually prefers to spread out risk and invest in different entities.

Amount of investment

PE firms invest at least $100 million in a single company. Venture capitalists, on the other hand, spend $10 million or less in each company, since they largely deal with startups with less predictable chances of success.

Focus

PE firms don’t maintain ownership for the long term, instead preparing for a level of exit strategy after a few years. They seek to improved upon an acquired business and sell it for a profit afterwards. Venture capitalists get involved in businesses’ earliest stages of operation, and it’s often the startup capital they provide that offers new businesses the means to become appealing to private equity buyers.

People

PE firms tend to attract former investment bankers, while VC firms obtain a more diverse mix such as product managers, bankers, consultants, and former entrepreneurs.

Scott Tominaga is PartnersAdmin LLC's Chief Operating Officer with over 17 years in the financial services industry. Read more about the finance industry on this page.

The basics of venture capitalism.

Keep in mind that two types of financing exist: equity and debt. The former refers to the investment a company gains in exchange for the investor having part-ownership of the business. Debt financing essentially means payment with interest.

Venture capital or VC comes in at the onset, referring to financial capital given to high-potential startup companies in exchange for equity. Venture capitalists provide the funds, while their firms oversee the sourcing of deals, making investment decisions, and maintaining the resulting portfolio.

There are different sources of capital to choose from, including so-called angels, micro seed funds, and growth equity. But venture capital is unique in that it works by utilizing medium funds that invest large amounts of capital to gain equally large amounts of equity.

The process of gaining venture capital begins with an entrepreneur getting introduced to various VC firms. The entrepreneur then pitches their business to the said firms, provides them with term sheets should they decide to invest, then cultivate the business relationship through time. The final step is the repayment of the venture capitalist(s) through IPO, acquisition, and even bankruptcy, should the business fail.
Venture capital often plays a major role in the stage of a company’s lifecycle wherein the business is beginning to commercialize its innovation, especially as it now builds the needed infrastructure (manufacturing, sales, marketing) to grow the business.

PartnersAdmin LLC’s Chief Operating Officer Scott Tominaga has worked in the hedge fund and financial services industry for over 17 years. His company was established in 2008 with the intent of providing quality, outsourced solutions that meet the dynamic back office needs of the alternative fund industry. For similar posts, check out this blog.

Emerging financial services trends shaping the industry.

The financial services industry is one of the first to be directly affected by innovations and disruptions in technology. This is especially true in the internet age, when cybersecurity and investment protection are of prime concern.

A key trend to pay attention to is cybersecurity investment. As the 2020s approaches, many banks are channeling their resources to security infrastructure, especially with rampant cyber-attacks. A recent study by the Cybersecurity Market Reports predicts that one trillion dollars will be allocated to cybersecurity alone between this year and 2021.

Corporate banking is also seen to invest more in client-oriented technologies, as competition for offering the best customer experiences goes up. Digital solutions are being developed in line with the rise of cryptocurrency and blockchain technology. Also, loan expansion strategies will target the middle market more and should lead to significant increases in revenue in the coming years.

As Fintech continues to gain ground, its investment values will rise accordingly. Such numbers are seen to go up to as much as $4.7 billion by the end of 2018. This is coupled with the speedy deployment of automation strategies. The goal of such a move toward robotic processes is increased productivity and overall efficiency internally while delivering optimal customer service.

Scott Tominaga is the Chief Operating Officer of PartnersAdmin, LLC. He has almost two decades of experience in the hedge fund and financial services industry. Read more about the financial services industry here.