If you’re seeking investors for your startup company, keep in mind that your backers are interested in exceptional returns. Therefore, you’ll have to show them how they can expect to make money. For example:
A public offering. Convince investors that your company will grow to the point that shares can be sold to the public, at a substantial profit to shareholders.
A buyout. Alternatively, you can suggest to investors that your company will be acquired by another company, public or private.
Refinancing. If your company posts impressive cash flow and earnings, a large bank loan may become available. You might use the proceeds from this loan to buy out your equity investors. With a refinancing, investors get their money and you keep running your company. This might be the best plan if you hope to pass on your business to children or grandchildren.
Outside investors will be evaluating you, too. They’ll help to finance your business only if they’re convinced that you’ll devote all of your energy (and a significant amount of your net worth) to make the company succeed.
