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a)From a practitioner's point of view, the overall picture of the structure of the investment process consists of six stages. b)From the founder's perspective, when
a)From a practitioner's point of view, the overall picture of the structure of the investment process consists of six stages. b)From the founder's perspective, when looking for investment the things to keep in mind are the amount of funds to be raised and exit strategy. Explanation: a)It is imperative for every investor to understand the investment process before taking up any investment. This is because it outlines the various steps for creating a portfolio, and underlines the order of actions which helps to understand the investors risk preferences to performance evaluation selection and asset allocation. The structure helps the investors to understand the origin of various investment philosophies and strategies. The structure of investment process consists of 1.Screening of investment opportunities - it includes a network of connections on the territory (OTT), scouting OTT, meetings to familiarize with the stakeholders, and comprehending the project and transactions. 2.Preliminary Analysis - The time frame for this stage is two weeks. It includes strategic and business sector analysis, analysis of business plan, analysis of management and organizational structure, and financial analysis. 3.Deal assessment and structure - the time frame for the stage is one to one and a half months. This includes thorough examination with management and shareholders, transactional structuring, and forming an investment memorandum for the decision making department. 4.Due diligence - The time frame for this stage is the same as the previous stage. This includes involving advisors with expertise in marketing, business, tax, accounting, environment, employment law, and legal matters. 5.Deal completion - this stage includes conclusion of transactions on assessment on the economic health, and transactional structure. 6.Contract Signing - This includes taking help of a legal advisor to draw up a contract. A start-up company needs funds to operate in the first few initial years that is before it starts generating revenues. It needs to be very prudent and exhaustive in its research before taking up investment in the market. So based on the need of funds and risk- averse stance until a sound footing is achieved, the investment portfolio of the start-up companies should consist of minimum risk and maximum return investments. They can also invest in shares or bonds both short-term and long-term which have a high return and low risk history, this way they can be assured of earning profits in the short-term and long-term as well. They to invest in short-term projects more than the long-term projects because of the funds requirement in the current period will be more than in the long-term The types of investment are relevant for a start-up company are as follows: 1.Crowdfunding - This is collecting funds through the efforts of family, friends, individual investors, or customers. This method is more feasible to start a company because it is easy for the entrepreneurs to bring the interested and individual parties on board. Traditionally, entrepreneurs have to spend their time and money to reach the potential investors and put in huge efforts to vet them. Crowdfunding is easier and more popular among entrepreneurs these days. This could include banks, and angel investors. 2.Venture Capital - This type of funding is for the start-ups which have high risk but also, have an exponential growth potential. The start-up planning to make quick and huge revenue in the future should approach venture capital firms because investment is large. b)From the founder's perspective, when looking for investment there are a few things to keep in mind- 1.Research on the potential investors, and approach only those who make sense for your company. 2.Have a business plan ready and the amount you want to raise. 3.The exit strategy should be pre-chalked out. 4.Letter of intent is a document which has a company's plan/actions/steps to negotiate or carry out the investment. This helps the start-ups in the long-run. 5.Term sheet is an investment blueprint until a binding document is not prepared. It is a sheet which has terms of negotiations in detail
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