Archive for Angels & VC’s

private-investor-questions Attention: This is ONLY for Real Estate Investors who are willing to Do What It Takes to Have Private Money for their Deals.


Do you want $100,000’s of Private Money from Private Lenders to Use As You Please for Your Real Estate Deals?

Flub these Answers and You Can Kiss Good-bye any Chance of Getting Private Money Investments

What you need to know first  

This is What You Need to Know First

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privatemoneylendingcoaching-200x200

An intensive personal 8-week training
to bring you to getting the check

Here’s How to Enroll in the Private Money Mastery Program

The Private Money Mastery Program is a short-term intensive 8-week training the will give You the entrepreneur, the “real life” skills, ability and every Resource you need to go out and find those high-net worth individuals who are interested in investing in your business and then actually convince them to write a check.

The system is based on Professor Richard Odessey’s GRAD formula (Get Ready, Attract, Deliver).  Richard is both a longtime entrepreneur and a Private Investor himself.   You will learn directly from Richard and the CEO of his Angel Investor Group.

And you will get personalized instruction that you can apply to your very own business and go out and raise the capital you need to succeed.

Here is the knowledge and skills you will develop:

I. Get Ready

When you meet with those Angel Investors (or anyone else who might invest), you’ll want to be totally prepared.  Imagine the confidence you’ll have knowing you have a great plan, a great investment and that you can easily respond to anything an investor throws at you.

So, well start off by helping you:

  • create your credibility kit including an impressive bio, business summary, and testimonials
  • create your board of Advisors and Strategic Team to bolster your credibility and appeal to investors
  • For real estate investors we’ll show you how to put together your property  package
  • Create your offer that will stimulate the greed glands of your investors without giving away the farm.
  • Make sure you have the proper “investor-friendly” entity structure
  • Create your 1 page investor profile (sophisticated investors with big bucks will expect this).
  • Create a timeline so you can accomplish your goads in weeks, not months or years

II. Attract

In the “Attract” phase you will develop the tools and resources to find the investors that are right for your business and learn how to get them interested in investing.

You will:

  • Work with your list of contacts and learn how to expand
  • Get an in depth understanding of investor psychology and learn what buttons to push
  • Develop an “elevator pitch” that will catch the attention of investors
  • Learn how “Get the Meeting”
  • Develop master networking skills.

III. Deliver

This is the “show me the money” part of the formula.  It consists of:

  • Developing a Powerful, Concise and Effective powerpoint presentation
  • Recording it.
  • Having your presentation professionally critiqued
  • And practice, practice, practice
  • Going over questions you will be asked and how to answer them.
  • How to ask for the money

If you agree to put in the work, we can show you how to master all these skills, and go out and get the money.

Private Money Mastery is an 8 week intense program.   You will be mentored by 2 master instructors: an experienced entrepreneur/and investor, and the CEO of an Angel Investor Group.

This is a totally unique program devoted to skill mastery and is only for entrepreneurs willing to do whatever it takes to succeed.

Please Fill out and Submit the Application below.
Richard will contact you to set up your first meeting.


Tell Us About Yourself
First Name *
Last Name *
Email *
Phone 1 *
Street Address 1 *
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City *
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Postal Code *
RE Experience Level
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private money lenders 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 for Start up businesses 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.

raising private capital from private investors 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). 

3. “We can achieve our exit strategy with your investment alone.”  All start up companies need more than one round of financing. In fact that should be part of your business plan.  You should only be asking for enough capital to achieve the next milestone that will increase your valuation.  Otherwise you risk giving up to much of your company.

4. A Business or Growth Plan that is Unrealistic or not well-thought out.  You’re going to have a difficult time convincing an investor of the viability and worthiness of investing in you if you use unproven revenue models, distribution schemes, or marketing plans.

5. Not Describing your Product or Service Concisely and Clearly.  If the investor can’t understand what you are doing, he or she is not going to invest.   And even if they have to struggle to understand your concepts, they will be concerned about the clarity of your thinking.

6. Ridiculously high valuations.  For example, if you are starting a company with just an idea and some market research, to ask for $100,000 for a 5% share of your company, you are valuing the company a $2 Million.  To an investor this indicates you are unrealistic and you may be a difficult person to deal with.  You will not get a chance to negotiate this down, because your number is out of the ball park.

7. “I am going to use part of the capital to pay off past business or personal debt.”  The investor wants their funds going toward growing the company, not bailing you out of past mistakes.

8. “I’m only willing to give up 5% of my company”  At an early stage to be unwilling to give up reasonable amount of ownership for a large investment that is essential to achieving your milestones also pegs you as naive, or unrealistic, and gives the investor the impression you may be difficult to deal with.  Actually, if you think about it, this is just another way of saying that you need to have realistic valuations to interest investors.

9. Complex Ownership or Stock Structure.  When you are starting out, do not make promises to early investors for small investments that is going to complicate your ability to raise large investments.  For example, notes convertible to large % of ownership, critical patents owned all in part by 3rd parties, etc. 

10. Misrepresentation.  If an investor even gets a hint that you are not being completely honest and open about all aspects of your business, it’s Game Over!  You need to completely disclose all your skeletions including bankruptcy, previous business failures, legal disputes, etc.  Failure to do so, can constitute fraud and get you in financial and legal trouble if you go ahead with the investment.  When in doubt you should consult a securities attorney.

raise private equity capital
Many new or beginning real estate entrepreneurs despair about raising money from private investments to fund their deals, because they have not yet done a deal themselves.

Therefore, they think, “Who would want to invest with me”.  It feels like “Catch-22”.

Now, experience is important.  However, it doesn’t have to be your real estate experience.  In order to understand this, you have to start out with a change in mindset.

Let me ask you a question.

When you invest in the stock market, do you invest in a company like IBM or do you invest in the CEO of IBM?  Heck, do you even know who the CEO of IBM is?  Probably not.  You see, private investors feel much more comfortable investing in a “Company” rather than an individual.

So, besides all the other advantages of forming a legally recognized entity like an LLC (Limited Liability Company) or a Corporation, you acquire the credibility of being a “Company”.  By the way, the dba (doing business as) structure is not a legally recognized entity and brands you as an amateur.

Now, once you are a “Company”, you can appoint officers, you can appoint members of a Board of Directors, or you can appoint a Board of Advisers.  Therefore, if you lack real estate experience, appoint individuals who have great experience in this area; and if you lack business experience, appoint individuals who run successful companies and have years of experience.

In other words, as a legal entity, you can appoint, hire and associate with individuals whose credibility will boost your own.

Now some of you may have people that come to mind immediately for you ask to be on your Board of Advisers.  In fact, you should begin to make a list of those individuals who have the various expertise that you need and who you know would be willing to participate at this level AND have your success in mind.

And here’s a Bonus.  While my time and how I invest it is very very important to me, for those of you who choose to attend our Advanced Private Lending Summit, you can appoint me to be a member of your Board.  (Please don’t ask this of me if you do not attend, since I can only lend my reputation to people I know and work with.)

To find out more about this one-of-a-kind workshop, Click here for more details about how you can attend the event AND receive a huge member discount.

angel investor groups-venture capitalLooking to join or network with Angel Investors.  Find the group nearest you with this state by state list.

Angel Investor Groups (Excel)

With high net worth individuals you aren’t the first or only investment they’re considering, so wouldn’t it be critical to immediately convince the investor of the value of what you’re doing?  The best way to do that is tell them a story about the reason why of your investment.

For example, you could say,

“I know you’ve been hearing a lot about the foreclosure crisis and you’ve probably heard that some people are making an absolute killing buying up real estate.  Have you ever thought that you’d like to get in on it, but lacked the knowledge or are concerned about the risk?

“Would it make it more likely for you to invest if you had a partner with an experienced group that also has unique and proprietary software that objectively quantifies the risk of any real estate investment and provides extraordinary returns while minimizing the downside?  Let me tell you how we do it.”

Now wouldn’t it be great if you had someone to help you create your own convincing story? If so, I invite you to join us at the Advanced Private Lending Summit, where I will work with you personally.  (See Learning Center for details).

find private money lenders

An interview with a Financial Advisor to High Net Worth Private Investors

This is a ‘Must-Listen’ to anyone interested in raising money for their Business

 

In this “kiss & tell” interview you will

Find out:

·What thing will automatically give you away as an amateur.

·What ROI private investors are looking for

·Whether to offer promissory notes or equity participation

·How long private lenders will wait to get their money back

·How to explain the risks in an investment

·And much, much more…

This is true inside information, exclusive to Members of the Investor Wealth Network.

How to get in touch with Randy Brunson:

www.CenturionAG.com (subscribe to the newsletter)

Email: rbrunson@centurionag.com

Phone: (770) 817-0525 begin_of_the_skype_highlighting (770) 817-0525 end_of_the_skype_highlighting

 


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.

 

Angel
Investors
Venture
Capitalists
Factors Points Rank Points Rank
Quality
Management
7.1 1 5.4 1
Growth
Potential
4.7 2 4.2 4
Proprietary
Product
4.4 3 4.4 3
Market
Size
4.3 4 4.6 2
Barriers
to Entry
4.2 5 4.1 7
Competition 4 6 4.2 4
Return
on Investment
3.9 7 4.2 4
Table
1: How Angel Investors and Venture Capitalists Value Potential Companies

Taken from Brian E. Hill and Dee Powers’ Attracting Capital from Angels: How Their Money and Their Experience Can Help You Build a Successful Company, 2002.

In this article I will focus on Angel Investors, because they are a potential source of funds for both start up companies and real estate deals. [Venture Capitalists are not interested in real estate since they require at least a 10 fold return on their money, and real estate does not fit their investment model].

Quality Management

As you can see from the chart, the most important decision making factor for Angel Investors is the Quality of the Management Team. The angel investor wants to know:

1. Do you know what you are doing

2. Do you have experience in the investment area

3. Have you had previous successes

4. Do you have a business with a strong TEAM of experienced, knowledgeable
and successful individuals?

5. Does your team cover all the areas of expertise needed to make the venture
successful.

Most real estate investors start out as individual entrepreneurs. However, if you want to raise money from sophisticated private investors, you have to develop a real company with a team of individuals who can complement and supplement your experience and expertise. And if you currently have little experience, building a team is a prerequisite to your funding success.

And by the way, creating a successful business model will be a powerful factor in convincing even friends and family to invest with you.

You are also going to need a good and comprehensive business plan. I can practically guarantee you that no sophisticated investor is going to make a decision to invest without carefully studying your business plan. [If you need help in creating your business plan, see the Resources section].

[PART 2 – WITH CHART AND INTRO]

[NOTE: DET REFERENCE WILL BE REPLACED BY THE RISK ANALYSIS PROGRAM WHEN IT’S READY]

Growth Potential

For a start up business, growth potential refers to how big and profitable the company can get. In the area of real estate where the investment is usually focused on acquisition of a particular property, the investor will want to know the exit strategy and profit margin. What kind of profit is possible (and reasonable) from the investment, and how and when can you exit from the investment and pay off the investor.

Doing this type of analysis can get complicated especially if the investment will be over a period of years. If you need help, you should get the Deal Evaluation Tool that will help you formulate your exit strategy, project all the financial factors up to 10 years in the future, and calculate the risk and return for your investors.

The investor will also want to see your projections of the market you are buying in. Is your market appreciating, depreciating or steady? How can you turn this to your advantage? What does your demographic research indicate about the availability of buyers or tenants? You must have solid facts to back up your analysis.

Proprietary Product

For a start-up company, a proprietary product is essential, because it gives the company intellectual property rights over the invention. In real estate ownership rights are conferred when the property is purchased.

However, the investor is very interested in the uniqueness and benefits of your acquisition, management and exit plan. How does your plan insure your success under today’s market conditions? How does it address the risks inherent in any real estate investment?

Another consideration is how you can distinguish yourself from all the other real estate investment opportunities that come across the Angel Investor’s desk—and believe me, there are many.

In the Private Lending Insider you are fortunate to have access to 2 tools that will give you a unique advantage over other real estate investors, and make your offering a lot more memorable in the minds of Angel Investors. I know because I’ve tested this myself.
The first tool is the DealEvaluationTool (DET). The unique advantage you can emphasis with the DET is not only its powerful ability to calculate and project financials, but its ability to Quantify Risk. And it’s ability to evaluate alternate scenarios and strategies to minimize risk to the investor while maximizing profit! This is a really strong selling point since it addresses 2 key concerns: the return OF investment, and the risks to profit.
The second powerful weapon that gives you a unique advantage is the Joint Venture Facilitation Package . It has the ability to create a daily, up-to-the-moment current list of motivated sellers and buyers, and do it before anyone else knows about them. This can give your investor more confidence that you can find the best deals, and have a list of buyers to take them out of the investment.
If you are serious about creating an attractive and winning presentation for private lenders I highly recommend you to take advantage of your membership discounts and get both of these tools.
[PART 3 – WITH CHART AND INTRO]
[NOTE: NOT SURE WHAT SECTION THE DET IS IN]
Market Size
For start up companies, market size is important because it sets an upper limit on how profitable a company can be. For real estate, the equivalent question would be what the ultimate value of the property will be when it is sold. If your investors are taking an equity stake in your project, the size of the profit and the safety of the profit is their paramount concern.
You must have the research on all the factors affecting the valuation of the property, and the projection of those factors to the time of sale. Again, the Deal Evaluation Tool (see RESOURCES) can be powerful help in making your case.
Barriers to Entry

This concern focuses on what does the company need to accomplish before in can successfully start making a profit. For real estate investments this could include:

1. Money – acquisition, rehab, carrying costs, etc.

2. Financing – if institutional or other financing is needed

3. Renovation – costs, completion time, etc.

4. Leasing or Sales team

5. Contracts with service providers

6. Property management

7. Etc.

These should be addressed in the business plan. In fact, the answer to these questions should be the basis for planning any acquisition. And it also emphasizes that you should put together a professional team with expertise in all these areas. Professional Investors regard a “lone wolf” as a liability, no matter how much skill and experience you have personally.

Competition

Competition comes from other business entities that are selling a similar product or service to yours. For example, if you are selling single family homes, your competition comes from other homes like yours that are on the market. When there is a high supply and lower demand, what is your strategy that will give your property a significant advantage over similar properties on the market:

  • Price?
  • Terms?
  • Amenities?
  • Location?
  • A ready and willing list of qualified buyers?
  • Etc.

A Private Lender must know and be comfortable with your answer to these questions. Ultimately, if you can’t “beat the competition”, your investor faces a big loss on his investment. So, make sure your exit strategy is bullet-proof.

[PART 4 With Intro]

[NOTE – there could be a reference here to my new risk evaluation tool, ALSO  reference to upper level mentoring program]

Return On Investment

There a rule of thumb that some Angel investors subscribe to that says a good return is seven on seven—that is a 7 fold return in 7 years. That amounts to a 32% annualized return. That’s a pretty high return for a real estate investment.

There are two ways to address this:

  1. Create a financing plan to generate that kind of return
  2. Mitigate the risk so that a lower return is more acceptable

For the first, you could use leveraged funding where the majority of the acquisition cost comes from institutional financing and other sources, so the investor is only putting up a fraction of the cost, and still reaping a significant percent of the profit.

However, realize that with this kind of leveraged financing you are dramatically increasing the risk.  For one, if the investment goes south and your financing institution forecloses, your investors face the possibility of a total loss.  Also, you introduce an additional risk that if the cash flow is ever not adequate, you may default on your note.

Another simple way to increase ROI (if your deal structure allows it) is to reduce the exit strategy to less than a year. For example, paying 15% on a rehab that pays off in 6 months can generate an annualized 30% ROI.

The second strategy of reducing the risk might include having the investment secured by equity in the property-with your investors in first position.  You can also reduce risk by selecting markets and properties that inherently have less risk exposure and putting in place tactics and procedures to address potential risks that may arise.

Another risk reducing strategy would be to have a buyer (with cash or approved financing) lined up for the property before you purchase (e.g., a flip).

The Jockey, Not the Horse

There is a saying in the Angel world: “Bet on the Jockey, not the Horse”. Angel investors take a personal interest in their investments, and they are going to want to meet the management of the company, before they make a decision (Key Secret #5 – Trust).

Therefore to be successful, you must plan to meet your investor prospects and make a convincing presentation of your plan and your business.

If this is an area, you need help with, I strongly recommend you attend our [UPPER LEVEL PRIVATE MENTORING PROGRAM] where we cover all these topics, and much, much, more…