Startup Fundraising - Do you know who you are talking about?

Venture capital, private equity, mezzanine debt, venture debt, angel money, investment bank? What is the difference and who are the actors? Many people begin to look for means and with investment bankers or business brokers, without really understanding what they are looking for, or associate them to speak.

Venture Capital

Venture capital companies (VCs) money from limited partners and invest the money in companies for a portion of theProperty. This is not so different than say investing in the stock market: they buy stocks and have a say in how the company is run (to make a small advance - that is, what is the proxy). With VCs, it is a private transaction, and they require a significant amount of control. They are not interested in running the business on a daily basis.

Angel Money

Angels are private individuals to invest their own money into a company for a share of the Company. The amount ofControl of the angels will usually depend on the complexity of the individual and the interest he or she has participated in the company. Some angels are to invest and come to the management team which to invest some and stay very hands off the management of the company.

Private Equity

Technically speaking, but no property rights in the private equity investment through a private transaction, the VCs and angels also purchased. However, as the private investments matured in the marketdot.com era, private equity has come late to companies that invest large U.S. dollar mean for a significant contribution with the intention of the company fit for the future of an IPO or sale. This term also includes leveraged buyout firms.

Venture Debt

A venture debt financing, which is not a stake in the company required (although it guarantees a rule, want to). Similar to venture capital, it is for early stage companies that are interested in financing,Expansion. They require a high interest rate and a degree of control over the company, usually in the form of contracts.

Mezzanine Financing

How are private equity, mezzanine capital for more mature companies. The interest rate is usually high and warrants are usually required. Mezzanine capital is subordinated bank debt, but a claim on the assets of the company have priority to the shareholders.

Investment Banks

Unlike theirName, investment banks not to invest and not to lend. They are interested in transactions between companies and IPOs. They use their experience and knowledge in the company to the public market and to other banks (which then sell the shares) to investors and pays a fee for this service. In general, brokers and investment banks are not interested, the owner himself shares.

Business Broker

As an investment bank,Business brokers are not interested in money invested. They are interested in finding a buyer for your business. They usually have many contacts in the industry and have a good understanding of the value of the company and what are acquiring the current structures.

If you have decided that the time is to raise money for your business, you need to decide what you ultimately want. If you are willing to be out of business, you want an investment bank or business broker. If you plan on havingYour company to the next level and it grows to an IPO, then you are probably looking for venture capital or some type of debt. If you are interested in readying the company for a big sale, then you can find a private equity firm. To understand what you want is the key to the best use of your company.

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