| Most experienced mergers and acquisitions | | | | and face much less risk if they fund an existing |
| professionals would probably agree that buyout | | | | business. Also, their is likely some sort of hard asset |
| funding is much easier to raise that start-up funding. | | | | that can secure the funding. Rather than a pure |
| Here's some advice learned the hard way, through | | | | equity financing, it can even be structured as part |
| years of experience, about raising capital for a | | | | debt and part equity, which means the management |
| business venture. First of all, the absolute hardest | | | | team can retain more of the equity themselves. |
| capital to raise is for a start-up company. Investors | | | | A little creative thinking can even allow a |
| don't like investing in a company with no track record | | | | management team to kill two birds with one stone. |
| and worst yet no revenues. | | | | Maybe they can't get start-up financing for their |
| Second, look at the odds against you trying to raise | | | | business plan, but they might get buyout funding for |
| capital for a start-up company. Each year literally | | | | an existing company. They they can use the profits |
| thousands of newbie entrepreneurs draft business | | | | from that venture to also launch their start-up |
| plans and set out in search for venture capital. Very | | | | company, especially if the two companies are |
| few of these people are actually successful at raising | | | | somehow inter-related and benefit one another in |
| capital for their venture. You also need a very thick | | | | terms of of sales, marketing or research. |
| skin to handle the emotional toll associated with | | | | Hopefully this has given you some food for thought |
| start-ups. | | | | and allowed you to increase your options in your |
| Now if these entrepreneurs were to find an existing | | | | search for capital. Buyout funding is a much easier sell. |
| profitable business instead of trying to start from | | | | Just think, day one after the closing you will likely be |
| scratch they would stand a much better chance of | | | | generating sales, whereas with a start-up it could be |
| raising that capital. Investors have more confidence | | | | months before you have any sales. |