Advice for owners of growing businesses who are considering borrowing money for the purposes of expansion:

Indeed, the technology was wonderful, but I was still trying to figure out how they were going to make money with it, once they produced and upgraded prototype model ready for sale. They just filed the patents, and everything looks on the up and up.

Don’t skimp on paying to have an accountant, MBA or other financially capable person help you put numbers to what you are doing. What financiers look for is someone who can “do numbers”. It does not have to be you, but you have to have access to someone who can do it.

A company should identify that whether required investment is financially possible for it and in return would it be profitable? At time of investment, it is very important for a company to realize whether goals can be achieved by this investment program.

Manager’s responsibility is to make decisions that are beneficial for their organization and decisions shall be based on available information at time of crisis.

You see, probably the most important thing in a business plan, and something that the venture capitalists are looking for is how well thought out your marketing plan is, and what strategies you are using to hyper-drive and blitz your future success.

• Credit Cards- It may be practical to use credit cards for smaller amounts. Borrowers can get money on credit cards quickly, and with no collateral. Discipline in repaying the high interest as quickly as possible is obviously paramount.

• Selling/ Pledging Accounts receivable to private lenders, also referred to as “Factoring”. This is an expensive type of funding. It works in some cases and industries, such as the clothing industry, where such funding is typical. Make sure your profit margins are ample and your customers are strong to absorb the cost of selling your accounts receivable.

This high instability in investments reflects that it is very difficult for many companies to manage their investments in this fast-paced and high risk environment. Past experience has placed great impact at any company and sometimes they are so uncertain whether they should invest or not even if company is doing well. So these investment programs are very helpful for understanding functions used in corporate development. There are strategic reasons to start projects out of which some go successful and rest of them fail.

There are two main characteristics of investments done in corporate venture capital, named as objectives and degree of investment at start-up. Different companies have range of such investments and this funding proves fruitful in long run. Strategic investment means that a company is investing to promote its sales and profits. A company which involves strategic investment locates and exploits synergies between itself and a new venture.

In addition to a strategic objective, an organization may have financial objective. This shows that main purpose of investment is to ensure as high return as possible. There are many competitive advantages of Corporate Venture Capital division over private Venture Capital. Some of them are superior knowledge of markets or technologies, its strong balance sheets and its ability to be a patient investor.

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