Thursday, 28 May 2020
JFGT (20200528-20:28:13 to UTF-8) ART 168 en => fr
Attracting venture capital investments
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This form allows you to attract international financing for start-up capital in the earliest phases of the life cycle of the company when it has no position on the commercial market, nor of sufficient financial resources nor the liquidity of mortgage assets and, therefore, credit and stock forms of capital available to it . Venture capital is usually given to the introduction or the patenting of ideas. It also includes several subsequent stages of funding, until such time has not yet been established commercial production. Further funding for product commercialization and launch of new products is called the private financing. In the world today there are about 3,000 venture capital firms and private equity funds, with total capital of $ 250 billion, growing annually by 20-30%. Under the direction of ICG is now more than 7 venture capital funds with total capital of over $ 1 billion

The main form of attracting private and venture funding is the issue of shares off-market venture capital funds, private equity funds, as well as private or strategic investors. It is possible structuring and more complex financing when the owners issued an option to purchase the share of private investors. With the growth of maturity and risk mitigation company, financing conditions are becoming less rigid: If at the beginning of private investors are trying to get a share, close to the control, then at later stages may offer them a package below blocking. Accordingly, a key factor in attracting a certain amount of funding from retaining control in the hands of the original owners is to assess the profitability of the project.

Attracting venture capital funding is particularly common for high-tech companies and small businesses with serious market prospects and great potential for growth.

To obtain venture capital Russian or Ukrainian companies must:

  1. Availability of good that has no global analogue technology or development, estimated at least one of the following criteria: novelty of the product, cost of production technology, using a new, cheaper raw materials, environmental friendliness.
  2. Availability vnetehnologicheskogo know-how "associated with the software, a business idea, etc.
  3. Steady increase in market sales, the prospects for further growth controlled market segment, coupled with the presence of an exclusive competitive advantage due to internal reasons for the company.

The process of attracting venture capital

Organizational process of raising venture capital is as follows. We first estimated the overall attractiveness of the project, for which the company provides expert of the company ╚TAXC Limited╩ information on their patents, designs, know-how and exclusive competitive advantages, as well as financial statements, a description of its structural and technological organization, and information about the owners and top managers. Then ╚TAXC Limited╩ analyzes the underlying asset (patent, know-how, benefits), is building a financial model of the company and produces its investment banking assessment, which is taken as the basis for negotiations with investors, and provides legal registration of the underlying asset. At the same time we are preparing all necessary documents: the information memorandum, presentations to investors and a package of legal documents. If necessary, also is restructuring the company to increase its value and transparency, while maintaining optimal ownership structure, cash flows and taxation.

Further negotiations are underway with a wide range of venture funds, private investors and private equity funds and ensures the proper representation of the project and acceptable financing terms. Once an investor held a detailed financial and legal due diligence of the company and its leadership and reached final agreement on the amount of funds raised and the share of new shareholders in the company, ╚TAXC Limited╩ provides a conclusion and the legal correctness of the execution of all major contracts in the transaction. After that, for the specified number of shares, bonds, and / or other securities (convertible bonds, options, etc.) an investor investing in the company.

Cost and schedule to attract venture capital

This entire process takes 3-6 months and costs the owners $ 50.000-$ 100.000 plus commission of 10% of the Venture Capital on the fact of receiving investment.

Unlike ordinary investor, private equity and venture capital funds are actively involved in the strategic management of the company, occupying a position on the board of directors, or its being a consultant. However, the operating part of the management company venture capital firm leaves only its leadership. It is important to note that, unlike conventional or strategic investors, venture capitalists and private investors have invested in the company not to acquire control, winning positions in its commercial niche and reap the benefits of complementarity (synergy) with its core business, but solely in order to financial gain, waiting for her in the region of 25% -35% per annum. 5-7 years after the initial investment, they will find a way of realization of this profit, it is selling its stake in the company. It can be done by the withdrawal of the public market (IPO), reverse takeover (Reverse Merger), acquisition or merger with another firm (M & A) in exchange for its shares or money, recapitalize the company, that is replacing equity financing credit (LBO) or by sale to investors of their share management company or a third party (including strategic) investor.

Advantages of using venture capital

With venture capital otchechestvennye entrepreneurs are not only Western money, but also advanced management expertise and extensive business contacts necessary for full international commercialization of its technology development, continuously while maintaining control over the company in his hands.

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