The Bao Lyon Group, LLCInvestors & Funding

Investors: Concept and types

An Investor is a person or entity that allocates capital with the expectation of a future financial return. The most common investors include banks, venture capitalists, peer-to-peer investors, angel investors and personal investors. The requirements, investment amounts, and funding process will vary according to the type of investment and the business/personal circumstances.

Banks as Investors

Some small businesses seek bank loans to help with their startup costs. After the mortgage crisis of 2007, it is more challenging to qualify for a bank loan. Companies may have to provide collateral, such as a home equity loan, and as much cash as possible to qualify. Usually, the banks will require a comprehensive business plan that includes:

- A complete, detailed description of the business
- A description of the business core products and/or services.
- Financial Projections.
- Management Projections.
- Planning for goal implementations.

Venture Capitalists*

The United States is currently home to more than 460 active venture capital firms that together invested $22 billion in prior years. The average investment in each company is $2.6 million. Venture capitalists typically invest in only 1 out of 100 deals they see, compared to about 1 in 10 for angel investors. They also conduct substantial due diligence, a process that takes up to five months for each investment.

Venture Capitalists invest millions in a company by securing a share in the company known as equity capital. The investment is predicated on the idea that the equity capital will increase in value over time and they'll receive a return on their initial investment. This type of investor typically works with companies who have a solid business plan and have already displayed some measure of success. You'll need to show a solid business plan and high-profit return. Venture capitalists rarely invest in startups perceived as risky.

Business owners should know that when investing with a venture capitalist, they are giving up partial ownership in the company. Some venture capitalists will want a say in management decisions. You'll also likely pay a higher ROI (Return On Investment), to this investor than the cost of interest on a traditional business loan.

Peer-to-peer lending

With peer-to-peer lending, startups and entrepreneurs can create online profiles for their projects on dedicated websites to be considered by investors. These services strive to match small-business owners with entrepreneurs while cutting out the middleman.

Potential peer-to-peer loan investors will have access to your credit history. In some cases, lenders will ask you to take steps to raise your credit score before receiving loan approval. Once you've been approved, you'll negotiate an interest rate for the investment with the lender, who is often a private individual. It's important to understand the terms of the loan and avoid falling behind on payments.

Angel Investors*

Angel investors provide more favorable terms compared to other lenders since they usually invest in the entrepreneur starting the business rather than the viability of the company.

Angel investors are also called informal investors, angel funders, private investors, seed investors or business angels. These are affluent individuals who inject capital for startups in exchange for ownership equity or convertible debt.

An estimated 268,100 active "angel" investors in the United States invest an estimated $20 Billion into 60,000 companies a year. Angel investors are usually wealthy entrepreneurs who want to leverage their wealth by investing in projects they are passionate about, especially startups that may have difficulty accessing more traditional forms of financing. Many angel investors are successful entrepreneurs themselves, as well as corporate leaders and business professionals.

In some cases, these "angels" make a high-risk investment in hopes of receiving a significant return if the company is bought out by a larger corporation or is publicly traded on the stock market. This type of angel investor is usually most active when the economy is strong or stable.

The terms of a loan from an angel investor are detailed in a promissory note. With angel groups, angel investors can pool their capital to make more substantial investments. Contact us for details and a tailored analysis of your situation and specific need.

Personal Investors

While you might not have considered approaching friends and family to invest in your startup, this is not an uncommon approach. In fact, personal investors represent a more significant piece of the pie than any other type of funding source, investing over $66 billion annually.

This approach is best suited for funds to get a new company off the ground. However, loyalty and affinity for the business open personal investors up to potential long-term investments.

A contract should govern personal investments just like any other type of investment. This may prevent the risk inherent in mixing business with family. Sign a promissory note spelling out the terms of the loan as well as a separate agreement if a partnership is on the table. Contact us for details and a tailored analysis of your situation and specific need.

(*) Contractual services

Project Handling

If your organization has a domestic or international project that needs management, we can help. From the initiation/planning phase through its execution/implementation we can assure that there are monitoring tools in place to complete your endeavor. If your company wants to expand to new markets, The Bao Lyon Group, LLC can provide compliance with the Rules, Standards, and Regulations needed to warranty the return on your investment. Call us for details!

International Receivables Support

Selling your products in foreign markets is a great way to expand your reach and boost your customer base. It is essential for every company to grow but requires expert surveillance of the newly developed market to assure the risks are minimized, and all investments are guaranteed. Our experience on the international field will be a great asset to your organization. Contact us for a free assessment of your accounts!

Import / Export Management

If your company manufactures a product that wants to commercialize internationally, we can provide an expert brokerage service finding new markets, clients, suppliers & customs agents to fulfill your need every step of the way. After the export/import process is complete, we could also monitor the international transaction assuring a prompt payment for the exported/imported materials. We can help you to maintain your cash flow in optimal condition; just let us know!

Mergers & Acquisitions / Mining & Exploration

The critical principle behind an M&A is that two companies together are more valuable than two separate entities -at least, that's the reasoning, especially when times are tough. Reliable companies will act to buy other organizations to create a more competitive, cost-efficient and, theoretically, more shareholder value. The Bao Lyon Group, LLC can help your team to accomplish a small, medium or broad merge process. Lets us know your plans, and we will generate a set of options tailored specifically to your needs. We can also offer a specialized Research & Development team if your company deals with Mining and Exploration. Call us for details!