“Tell me what you eat, and I will tell you what you are,” said French lawyer and epicure Jean Anthelme Brillat-Savarin. Similarly, tell me where you got the investment for your business and I will tell you what is in store for your business.
Each type of capital investment has pros and cons. Each type is perfect for certain circumstances. The key is for business owners to understand the differences and find the investment financing that is best aligned with your strategy and what is best for your business. Some people may feel that finding investment financing is difficult enough, let alone finding the perfect investor. Counter-intuitively, I believe your best opportunity for finding financing is to find the investors who are best for you. Every minute spent defining the type of investment that you need will save you many hours of lost time and energy down the road.
The three most common sources of financing are venture capitalists, private equity firms, and strategic investors. Venture capitalists want amazingly rapid growth toward serving huge markets and exit in three to five years. Private equity firms want to use debt to buy companies, pay down the debt, and sell in five years. Strategic investors and buyers want to change your company to fit into theirs.
My investment fund, Greybull Stewardship, is built to serve a business owner that wants to raise capital for growth or to take some chips off the table, wants to retain significant ownership (majority or minority), and is not yet sure whether to sell the rest of his company in one year or five years or never. Best of all, we love unique businesses with unique strategies. An investment from Greybull Stewardship allows you to continue to maintain your uniqueness and even further develop it rather than pursue worn-out strategies pursued by everyone else.
In life, you are what you eat. In business, you are where you get your financing.
Related Posts and Other Articles:
- Company Founder Regrets Sale to Private Equity [Mason Myers Blog April 25, 2012]
- Enlightenment About Investor Alignment [Mason Myers Blog April 30, 2012]
- Strategy Follows Structure — John Bogle On Investment Funds [Mason Myers Blog August 17, 2012]
- Optimal Owner for a School — Not Private Equity or Wall Street [Mason Myers Blog October 16, 2012]