Wednesday, December 2, 2015

Investor - details

Looking for an investor you might be expecting following details:
a) company turnover (in currency close to investor)

b) company margin (Brut and net)

c) amount of employees



d) description of your business + your key advantage .... thing of the way it will be seen from the risk side ... so the question is: What key advantage I have to decrease the risk for investor?

e) downside of your business: What risks are here, that the business will not perform as planned?

f) money needed -> important one .... how do you want to approach investor, if you dont know how much money you need. Of course stage by stage.... sky is the limit in unlimited future :)

g) RoI .... return on investment .... here please dont forget, that you may work with various sources of money. Lets say, that it is expected, that money invested in two companies, small one and big one, f.e. Company A -> new company with one year record and company B -> lets say Facebook would have different risks, we keep invested amount fixed. That may or may not be true. Imagine, to company B we will add bank financing, bank guarantees or other sources of cash. Therefore we will tier the whole debt by seniority. Bank loan to be most senior, bank guarantee second senior, A/P from suppliers third senior .... the investors cash. It could be possible, that the same amount of money invested in company A will be same risky as in company B. Therefore never approach investor with your risk consensus, ask him what risk and return is he looking for

h)  P&L and AL for last three years ... most important is growth of sales, after that margin and its change in time followed by other costs (rent, employees...) to find the BEP, where you meet profit. And than to find out the future value of the this profit discounted in time. Lets say I will be profitable in 3 years, normal rate between banks is 0,1% and premium for my business is 3% + my company is volatile to other ones by 2. Than discount rate will be calculated as 0,1 + 3*2 = 6,1% a year. Therefore my company generating profit in 3 years will be worth of loss of first two years accumulated with profit after 3 years discounted by discount rate and probability of profit in next years.

i) pledge ... what can I pledge and value it has to investor. Value by meaning how long, in what amount and by what probability it will be turn to what cash.



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