Money is Chasing Technology Deals

money technology capital growth

What value can the new partner contribute to the venture besides capital?

 

Foreign investor capital is reaching out to early stage technology companies. This can be helpful or harmful to an early stage technology  company.

It is always comforting to have a reserve of funds when a company is in the growth mode, but there is a danger of taking investor capital when a company is in a very early stage.  There is not enough history to support  the future value. 

The founder is seeking security more than anticipating future value. When an outside party expresses interest in investing in a start -up company the entrepreneur  often makes the mistake of not fully evaluating the pros and cons of bringing in a new equity owner

What value can the new partner contribute to the venture besides capital?

Consideration should be giving to the "other" contributions the investor can make to the business,

These invester contributions includie: 

  • Needed technology skills
  • Operational experience
  • The ability to expand the customer base 
  • Market and access to additional capital that may be required in the future

Remember, promises are not enough. The agreement must be in writing. It should  include  the performance requirements for each party as well as dissolution terms, commonly known as a buy-out provision. So often the terms for dissolving the partnership are ignored and then the company can be faced with unnecessary legal expenses.

Here Are Ten Ideas for Growing Your Business from the SBA

For those of you who have already successfully started a business and are ready to take the next step, you may be wondering what you can do to help your business grow. There are many ways to do this, 10 of which are outlined below.

Choosing the proper one (or ones) for your business will depend on the type of business you own, your available resources, and how much money, time and resources you're willing to invest all over again.

If you're ready to grow, take a look at these ten tips:

1.  Open another location.

This is often the first way business owners approach growth. If you feel confident that your current business location is under control, consider expanding by opening a new location.

2.  Offer your business as a franchise or business opportunity.

Franchising your business will allow for growth without requiring you to manage the new location. This will help to maximize the time you spend improving your business in other ways, too.

3.  License your product.

This can be an effective, low-cost growth medium, particularly if you have a service product or branded product. Licensing also minimizes your risk and is low cost in comparison to the price of starting your own company to produce and sell your brand or product. To find a licensing partner, start by researching companies that provide products or services similar to yours.

Next- Six Ideas for Growing Business

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About the author

Marjorie Weber

Marjorie Weber has been educating entrepreneurs and guiding them in their search for capital for the past 16 years: combining business training programs with one-on-one mentoring. Marj is currently a financial advisor for Florida SBDC at FIU. She was Chair of SCORE Miami Dade from 2010 to 2014. She also serves as an advisor to the Goldman Sachs 10,000 Small Business Program and the SBA Emerging Leaders Program and provides training for Veterans seeking an entrepreneurial path upon retirement from the service. She has  facilitated workshops under the auspices of Miami Bayside Foundation, Little Haiti Cultural Center and .local banks. She commenced her career as a real estate investment banker in New York and Miami..She uses these long term relationships to assist her clients in accessing capital. She knows both the process and the people and has assisted in providing financing for hundreds of businesses in Miami Dade.