Entrepreneurs with their next big idea would be forgiven for thinking that the current financial climate is not a good one when it comes to new investment. There’s good news, however: businesses of all sizes are still investing, with Apple the latest of several business giants to announce a fund, on this occasion totaling $430bn. While focused on the tech field, businesses of all sizes and in all industries are finding new investment to help them find growth and make an impact in the market. The key difference to boom periods of the past is in the methods of investment – there are a few crucial processes to understand before looking for capital.
The process of equity financing, where a part of a business is sold in exchange for investment, is still a primary form of financing, and continues to grow. CNBC figures show that investors put more money into equity in the last five months than the previous 12 years combined , a raw figure of $569bn. This shows that investment opportunities absolutely do exist. It’s very important that business owners know exactly what they’re getting into if accepting equity investment, and simulating the outcome of a proposed investment is a great idea. Given the incredible rates of investment, it might be easy for businesses to find new opportunities. Having options is a good idea – just ensure due diligence is conducted on the investing parties.
The angel investor
A less common but equally potent form of investment is found in angel investment. This is where a large institutional body provides large amounts of capital, typically in exchange for equity or debt. Yahoo are of the opinion that angel investors may be on the look-out for new opportunities given the sounds coming from the Biden administration: if capital gains taxes are to be increased, it’s a good time to invest money. Angel investments are largely dependent on the willingness of investors to look for new opportunities and, crucially, the ability of a startup to sell their idea. The key is all in the pitch, which should be digitally focused.
A digital focus is becoming more important, and can provide benefits to businesses willing to use the web to their advantage. That can be through crowd sourced funding, whether through classic platforms like GoFundMe or newer iterations such as Patreon, or through the advent of digital coin based investments. Bitcoin and alt-coins have been used for a huge range of investments – Dogecoin, seen in the news a lot lately, first found fame for sponsoring a NASCAR driver. This new digital economy is driving forward investment, and can be a legitimate way for digital business in particular to find a way forward – although, alt-coin investment has been found in non-digital industry too.
For new businesses, then, there are plenty of opportunities. These can be from traditional sources, but from the new digital economy too. The important factor is to keep an open mind and look for value.