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.

Making the case for venture capital funds

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As a key figure in PartnersAdmin, Scott Tominaga has extensive experience in the realm of alternative investments. Fortunately, for the many potential investors out there, Scott has shared a lot of his know-how in his series of blogs.

In today’s blog, Scott Tominaga reviews the many reasons why venture capital (VC) funds are well worth the risk.

For starters, VC, like other alternative investments, have an inherent potential for massive long-term growth. If investors do their research and read the signs of the times and future trends right, their funding of startups and young companies could yield huge rewards in the years to come. So, even if VC is quite risky, it has become one of the most attractive alternative investments today when weighed against its potentially high returns.

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Scott Tominaga cites some of the biggest tech and online companies today such as Facebook, Google, and Twitter as the perfect examples of VC done right. What once were small, one-room businesses have skyrocketed to the top of the global tech empire, taking along their VC investors for the ride.

Apart from the funding, Scott Tominaga also mentions that VC investors can also be involved with other matters in the companies they choose to invest in. For example, a number of VC investors have been known to take part in the decision-making processes as well as other operations within these businesses.

Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC, a company established to provide a quality, outsourced solution to meet the dynamic back office needs of the alternative funds industry. For more investment- and fund-related reads, visit this page .

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.

Investment ideas for the high net worth individual

Alternative investments generally have a higher minimum investment requirement compared to traditional investments. They are also less liquid. However, alternative investments can be very lucrative for investors, and may even turn a profit during down markets. 

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Let’s take a look at some of the more popular alternative investments for high net worth individuals in the world today. 

Real estate 

Real estate is probably the most well-known of all the alternative investments. It is also both dependable and profitable. A lot of developers who started out in real estate back in the middle of the 20th century are now multi-millionaires. There are however, a lot of bases to cover and principles to study before going all-in in real estate, but once an investor hits his stride, it can be extremely lucrative. 

Managed futures 

Managed futures are indeed for the high net worth. What happens with managed futures is that funds and assets are handled by managers (sometimes firms for entire families), and are invested in different businesses. Managed futures are sensibly considered because people aren’t confident in their own business acumen. High net worth individuals then rely on and trust fund managers to make the right decisions. As such, becoming a fund manager takes a lot of accreditation, and only the best are trusted. 

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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.