Saturday, October 25, 2008

Venture Capitalist

For people who loves business but either have no expertise or time to start one themselves might be interested in becoming a venture capitalist. In a nutshell, a venture capitalist invest in other people's business, usually receiving a percentage of interest along with the capital. Interest rates are attractive and they vary from 3% to 7% a month. These type of investments are usually secured via contract with post dated checks for payment and the business is registered via DTI or SEC. The types of business which usually required funding by venture capitalist are just starting up and have difficulty securing loans with credit agencies or banks which they are deemed as high risk.

But if banks and credit agencies don't want to lend to them, why should we right? Isn't it risky? Well as with every other types investment, due diligence is the key. Venture capitalist look for start-up, high potential growth companies that they can invest into. It really depends on one's appetite for risk, the higher the risk the bigger the profits as the saying goes. These type of investment isn't really for everybody. But the promise of big returns attracts a lot of potential investors.

But how do we find these business to venture to? You might have seen these type of advertisements in various buy and sell sections of news papers and magazines usually with the following headlines...
  • GEN. MERCHANDISE Needs financier, 50/50 profit sharing
  • PUBLICATION Needs financier, new concept, big profit
Although the headlines make it sound so attractive, it is important to sift through all of these offers to find which ones are legit and which ones are down right scams. Here are some guidelines for the start-up venture capitalist:
  1. Transparency or legitimacy of the business - Very important to take into consideration before sinking any of your hard earned money into.
  2. Back-up plans - Alternative course of action in case the company folds by any legal means necessary.
  3. Background check - Conduct a through investigation behind the people promoting the business or who are in business.
  4. Ocular investigation of the proposed business - Is there really a business going on and do not just rely on DTI to SEC papers as proof.
  5. Feasibility study of the product or service being offered - Can the product or service being offered able to deliver the promise returns?

1 comment:

PhiReZ said...

Blog walking^^