View Full Version : Investors

10-13-2010, 07:24 PM
Are investors willing to invest in buying a pre established business (I like the Idea of proven success) the return on investment is very good per year when buying a business but at the same time an investor/venture capitalist always seem like they are willing to take bigger risks to make bigger profits like the guy who gave the Google boys a check for 100 grand when the business didnt even make any profit yet please remember any advice would be great because my experience with investors is 0 im more of a sure thing type of guy and maybe can find some investors that are also sure thing type of guys the reason why I need investors is because im young and dont have the money to buy the business of my dreams and I also dont have the credit to get a huge loan

Business Attorney
10-13-2010, 07:49 PM
There are MANY investors who actually prefer to invest in existing businesses.

One type of investor is the professional investor or firm that exists primarily to provide capital for equity investments in privately held businesses. The purchases go under various names based on the details - leveraged buy out, management buy out, etc... The common thread is that the investors put up most of the money and the management (either existing management or a completely new team the investor brings in) also gets a smaller piece.

Another source is the angel investor - a well-heeled individual who invests in private companies. I have had many clients who got some capital from an angel investor.

Finally, there is the tried-and-true friend or family investor.

The first two types of investor are going to expect significant returns because equity is risky, no matter what the "proven success" was of the business before the acquisition. The friends and family investors are going to typically set their expectations of a return much lower than a professional investor, but if they understand risk, they will still expect to, and are entitled to, earn a return that is commensurate with the risk of any equity investment in a closely held business.

Harold Mansfield
10-13-2010, 08:18 PM
With Google, what they actually invested in was a technology. I'd say if you have some kind of world or web changing technology your chances are good. If you have something that is going to change the game like Google , then you are in good shape. Otherwise there is no comparison between what they have done, and what you want to do.

If you are going to change an industry in some way, those are the types of things that people want a piece of.
If you are just duplicating existing platforms or businesses and just changing the paint job or looking for people to invest in something that anyone can do, I'd say the chances are slim.

One thing about investors..they already have the money. Unless your thing is ground breaking and relies on your vision and technical or business knowledge to pull off...anyone can just hire a bunch of freelancers and do the same thing cutting you out of the picture all together.