Private Money: Will Your Deal Attract It?
 |
Want private money? Well, as you might have figured out, you can’t just walk up to a potential private lender, tell him or her about your “deal”, and expect them to write a check. No way. If you want to be successful in raising private capital for real estate, you have to learn how to “attract” private investors to you. |
|---|
So what’s the secret? Or to paraphrase a famous movie title: “What do Private Lenders Want?” The short answer is: put yourself in the private lender’s shoes, and think about what you would want before you invested your children’s inheritance is some real estate deal.
Now, what I’m about to tell you may shock you. It’s not the “easy-no effort” seminar version that gets you all excited, but won’t put a nickel in your pocket. These are answers based on the experience of raising “real money” from “real private investors”.
First, know this. Your private investors are walking around with an invisible antenna over their heads that is tuned to only 1 station: WIIFM or “What’s In It For Me?” Unless you can explain that clearly, quickly and concisely, you’re out. Private lenders have no patience for people who beat around the bush and waste their time.
Second, as a sophisticated private investor, I know that not all deals are good deals, and not all good deals (e.g. good for you) are good for me. So, don’t give me a canned elevator speech, and expect me to be excited and whip out my checkbook. First, “show me the money.”
Third, your private lender is as skeptical of the real estate market as the general public and doesn’t necessarily think it’s a “great opportunity”. How is your approach going to overcome those concerns and in fact benefit from them?
Next, anybody who has become wealthy enough to have capital to invest, did not get there by taking excessive risk with their money. The reason why lottery winners generally end up poor again is because they never learned this principle.
Or as Will Rogers once said: “When it comes to investing, I’ve always been more concerned with the return of my money than the return on my money.”
If you want private money, you need to explain to the investor, how he is protected from losing his principal and how he is going to get his money back (ROI = Return OF Investment).
And you must address the question of risk. Unlike most people, private lenders have fairly low risk tolerance. If the risk level in the deal exceeds their risk tolerance, no offer of a return is going to convince them to place their capital with you.
And the Final and probably the most important consideration for the Private Investor is: “YOU”.
Angel investors have a saying, “Bet on the Jockey, not the horse”.
Think about it. Would you invest your money with someone you didn’t know or respect, regardless of how great the deal was? I don’t think so.
Are you a person of high integrity, who does what she says she’ll do? Do you have the experience, knowledge and expertise and the team to see this deal through to a successful conclusion? And Trust me: No private lender is going to entrust you with their capital, unless these questions are answered and demonstrated to their satisfaction.
Seed Capital: Will Your Startup Business Attract It?
 |
Want Seed Money for your Startup?
Well, as you might have figured out, you can’t just walk up to a potential private investor, tell him or her about your “Great Idea” or your Company, and expect them to write a check. No way! |
|---|
Want Seed Money for your Startup?
Well, as you might have figured out, you can’t just walk up to a potential private investor, tell him or her about your “Great Idea” or your Company, and expect them to write a check. No way!
If you want to be successful in getting startup funding for your early stage business, you have to learn how to “attract” private or Angel investors to you.
So what’s the secret? Or to paraphrase a famous movie title: “What do Angel Investors Want?”
The short answer is: put yourself in the private equity investor’s shoes, and think about what you would want before you invested your children’s inheritance is some startup company.
Now, what I’m about to tell you may shock you. It’s not the “easy-no effort” seminar version that gets you all excited, but won’t put a nickel in your pocket.
These are answers based on the experience of raising “real money” from “real private investors”.
First, know this – Angel investors are walking around with an invisible antenna over their heads that is tuned to only 1 station: WIIFM or “What’s In It For Me?” Unless you can explain that clearly, quickly and concisely, you’re out.
Angel Investors and Venture Capitalists have no patience for people who beat around the bush and waste their time.
Second, as a sophisticated private investor, I know that not all ideas are good ideas, and not all good ideas (e.g. good for you) are good for me.
For example “lifestyle” companies (companies that will create an income for you but never build huge equity for the investor) are not investment candidates. So, don’t give me a canned elevator speech, and expect me to be excited and whip out my checkbook. First, “show me the money.”
Next, anybody who has become wealthy enough to have capital to invest, did not get there by taking excessive risk with their money. The reason why lottery winners generally end up poor again is because they never learned this principle.
Or as Will Rogers once said: “When it comes to investing, I’ve always been more concerned with the return of my money than the return on my money.”
If you want private money, you need to explain to the Angel investor, how he is protected from losing his principal and how he is going to get his money back (ROI = Return OF Investment). In other words you need a realistic exit strategy—preferably more than one.
And you must address the question of risk.
Unlike most people, sophisticated investors have fairly low risk tolerance. If the risk level in your business plan exceeds their idea of an acceptable and calculated risk, no offer of a return is going to convince them to place their capital with you.
And the Final and probably the most important consideration for the Private Investor is: “YOU”.
Angel investors have a saying, “Bet on the Jockey, not the horse”.
Think about it. Would you invest your money with someone you didn’t know or respect, regardless of how great the idea was? I don’t think so.
Are you a person of high integrity, and do you do what you say you’ll do? Do you have the experience, knowledge and expertise and the team to see this business idea through to a successful conclusion?
Trust me: No Angel investor is going to entrust you with their capital, unless these questions are answered and demonstrated to their satisfaction.
10 Things an Entrepreneur Should Never Tell An Investor
 |
When you talk to an investor about your business and your offering, he or she is usually listening with an ear of how to eliminate you from consideration. Unfair yes, but true. |
|---|
After all, the investor is risking his or her children’s inheritance on your business, and they are very sensitive to any percieved “danger” signs.
Here are the 10 most popular “danger” signs. Say anyone of these things and you will very likely eliminate yourself from any possibility of an investment.
1. “I have no competition”. or anything indicating that you are too casual about the competition. After all, the only way there’d be no competition is if nobody wanted your product or service. The competition may not address the needs of your customer as well, or as economically, and that’s what you should address.
2. “We will capture a high percent of the market”. It is not realistic to expect your start up business to capture more than a few percent of the market (and even achieving that goal is a challenge).
To See the Rest of this Content, Please Login if you are already a member or Register to Become a PREMIUM MEMBER of InvestorWealthNetwork TO READ ON.
Angel Investor Groups in the US (Premium)
Looking to join or network with Angel Investors. Find the group nearest you with this state by state list.
What Opportunities Do Private Lenders/Angel Investors Look For?
 |
What kind of opportunities are Private Lenders or even Angel Investors looking for. AND, what motivates them to “say ‘Yes’ and write the check”?
Listen to an exclusive in-depth interview with an experienced angel investor, while Richard asks the questions and gets the answers you always wanted to know. |
|---|
What do Angel Investors Look For? (Premium)
Angel Investors are individuals with $100,000’s to $ millions who look for high-return alternative (not the market) investments to put their money in. Isn’t that the kind of private lender you are looking for to fund your business or real estate projects?
Would you like to know how to get on their short list with your opportunity?
Here’s a checklist of the 26 key things angel investors look for when they evaluate a potential investment in a business:
How Angel Investors Decide Who to Fund (Premium)
Angel Investors or “Business Angels” are high net worth individuals who invest in start up companies in exchange for an equity stake in the company. These individuals are usually successful entrepreneurs in their own right who have built great wealth from their business(es) and may have sold them and have large amounts of cash.
They prefer to use a significant amount of that capital to invest in start-up companies and other alternative investments that will yield a high rate of return. They are comfortable with the risk a new venture may present, as long as it’s a calculated risk.
In a recent survey, these angel investors and venture capitalists were asked to rank the most important factors when valuing a company prior to investment. The factors were ranked on a scale of 1 to 7 with 1 being the most important. (see the chart below).
I am going to describe how you can use this information to present your business or your real estate deal as an attractive opportunity to an angel investor.
What Investment Terms Should You Offer Your Investor? Part 1 of 2 (Premium)
- Angel Investors
The most important thing a private investor considers when deciding on an investment is “What’s in it for Me”.
PART 1 of 2
Therefore, if you want to be successful, you need to
What Investment Terms Should You Offer Your Investor? Part 2 of 2 (Premium)
- Angel Investors
The most important thing a private investor considers when deciding on an investment is “What’s in it for Me”.
Consider how much you are going to offer an investor, and how to structure that offer.
Part 2 of 2
Accredited Investor Form
Questionnaire Form
Accredited Investor Questionnaire
Working with accredited investors requires much less regulatory compliance. However, you need to protect yourself by