Prime Capital Connections has access to many funding sources. Your business might even benefit from a strategic alliance or joint venture. Explore a variety of possibilities below.

Venture Capital

Venture Capital usually comes from one or more sources, the most common being medium to large institutions in the business of funding startups and /or existing businesses for a 1st, 2nd or 3rd round of funding. The money comes from the most sophisticated investors and the dollar amounts are usually in the millions, from $1M and up, and can be into the hundreds of millions of dollars coming from a combination of firms, known as a syndicate. We have a number of VC firms we work with; that stable of money is always growing.

Private Equity

Private Equity can come in all sizes but is usually smaller amounts of money than Venture Capital and is sometimes from affluent individuals vs. institutions. Private Equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a de-listing of public equity.

 

Capital for Private Equity is raised from retail and institutional investors and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet. The majority of Private Equity consists of institutional investors and accredited investors who can commit large sums of money for long periods of time. Private Equity investments often demand long holding periods to allow for a turnaround of a distressed company or a liquidity event such as an IPO or sale to a public company.

Angel Investors

Angel Investors can be friends, family, co-workers and more. The amounts invested range from a few thousand dollars to $100,000. There are no official guidelines on the investment amounts and some Angels invest as much as $250,000 or more in a single venture. Today, "Angel" refers to anyone who invests his or her own money in an entrepreneurial venture, unlike institutional Venture Capitalists, who invest other people's money.

 

Contrary to popular belief, most Angels are not millionaires. Typically, they earn from $80,000 to $125,000 a year, which means there is likely an abundance of them right in your own backyard. Angels come in two varieties: those you know and those you don't know. They may include professionals such as doctors and lawyers, business associates such as executives, suppliers and customers, even other entrepreneurs.

 

Unlike Venture Capitalists and bankers, many Angels are not motivated solely by profit, particularly if the Angel is a current or former entrepreneur. He or she may be motivated more by the pure enjoyment of helping a young business succeed rather than by the money they stand to gain in the opportunity. 

 

Angels are more likely than Venture Capitalists to be persuaded by an entrepreneur's drive to succeed, his/her persistence and their mental discipline. Angel Investors vary widely, but are typically willing to accept risk and demand little or no control of the venture in return for the chance to own a piece of a business that may be valuable someday.

Joint Ventures

An association of two or more individuals or companies engaged in a solitary business enterprise for profit without actual partnership or incorporation

 

A Joint Venture is a contractual business undertaking between two or more parties. It is similar to a business partnership, with one key difference - a partnership generally involves an ongoing, long-term business relationship, whereas a Joint Venture is based on a single business transaction.

 

Individuals or companies choose to enter Joint Ventures in order to share strengths, minimize risks, and increase competitive advantages in the marketplace. Joint Ventures can be distinct business units (a new business entity may be created for the Joint Venture) or collaborations between businesses. In a collaboration, for example, a high-technology firm may contract with a manufacturer to bring its idea for a product to market; the former provides the know-how, the latter the means.

Strategic Alliances

A Strategic Alliance is an arrangement between two companies who have decided to share resources to undertake a specific, mutually beneficial project. A Strategic Alliance is less complicated and less permanent than a Joint Venture-in which two companies typically pool resources to create a separate business entity. In a Strategic Alliance, each company maintains its autonomy, while gaining a new opportunity. A Strategic Alliance could help a company develop a more effective business process, expand into a new market or develop an advantage over a competitor, among other possibilities.

Roll-ups

A roll-up is a term used to describe a company that is built primarily through the acquisition of smaller companies with common services or products. Roll-ups are usually conducted by financial buyers in a specific market that is fragmented and can be consolidated. The market may be dominated by one player, with the balance of the competition made up of smaller private companies without sufficient scale and infrastructure to challenge the dominant player.

 

The financial buyer will identify the potential acquisition targets that offer products or services within the fragmented market and usually acquire them through a new platform (parent) company. The roll-up then entails putting the various businesses together under a common brand, administrative infrastructure, reporting systems and sales and marketing. The newly combined business is presented to the customer base as a single entity.

 

In a roll-up, value is created both by building a much larger, scalable entity that will command a higher valuation multiple on exit and by establishing a common platform of systems and processes that allows for easy integration of each acquisition. A roll-up is also known as a consolidation.

Reverse Mergers

A Reverse Merger is a type of merger used by private companies to become publicly traded without resorting to an Initial Public Offering (IPO). Initially, the private company buys enough shares to control a publicly traded company. The private company's shareholders then use their shares in the private company to exchange for shares in the public company. At this point, the private company has effectively become a publicly traded one.

 

With this type of merger, the private company does not need to pay the expensive fees associated with arranging an IPO. The problem, however, is the company does not acquire any additional funds through the merger and it must have enough funds to complete the transaction on its own.

 

Another way to do a reverse merger is to find a company that was public but went into receivership and/or bankruptcy. A trustee is selling off its assets, including the stock exchange symbol used while the company was a going concern. That stock symbol can be bought through the trustee. The Board of Directors of the defunct company meets with the acquiring company and votes to insert a new Board of Directors of the acquiring company's choosing. Poof! You are a public company and must abide by the rules of all public companies. (In times past, this was also known as a "poof" IPO or offering.)

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Michael Knight, CEO

303-335-7909

mknight@PrimeCapitalConnections.com

Prime

Capital Connections