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What are the Best Tips for Raising Private Equity?

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  • Written By: Kristie Lorette
  • Edited By: O. Wallace
  • Last Modified Date: 01 September 2016
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Private equity is money from private individuals. The money may be needed for a variety of reasons, such as the capital a business needs to grow, to buy shares or ownership in a business or distressed investments, where the money raised goes toward saving a business, organization or piece of real estate that is in distress or having problems. Raising private equity may require approaching private individuals who have cash on hand and are interested in investing money in a business venture. Typically, the investment is in a business or other type of investment vehicle that will earn the private investor a rate of return on that investment. When attempting to raise private equity funds, there are some tips to follow to ensure a better success rate in raising the money.

The investment objectives of the investor should be clear. It is typical for an investor to make an investment decision based on several different factors. When raising private equity funds, determine the investment objectives of each person to ensure that their objectives are in line with the investment opportunity being presented to them.

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When raising private equity, be aware of some of the factors that investors base their decision to invest on. Some of the criteria investors consider include who is raising the private equity and the stage the investment is in, such as beginning stage, growth stage or other. Investors will carefully consider how much experience the business owner has before investing capital in the business. Other characteristics investors consider include the industry in which they are investing and the amount of the investment required. Two additional factors investors consider are the length of time the money is invested, what the exit strategy is for getting the return on their investment and getting out of the investment and what the potential risk in investing their money.

Second, put together a solid business plan for the investment you are raising private equity to fund. The business plan should include a description of the business you are raising the money to fund. The plan should also illustrate the potential profits of the business and how this equates to a return to the investor. You may also want to include some information on the management of the business as backup evidence on how the business will get to the point where it is profitable.

Finally, position yourself as the expert that can turn the investor’s money into a profit for them. Not only does this require you to approach the right investors with the right manner, but it also requires you to reveal your knowledge or expertise in the business. for example, if you raising private equity for a landscaping business and you have been in the landscaping industry for 10 years, then this is experience you need to share in your business plan and with the potential investors.

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