Asset management involves financial processes designed to manage the tangible or intangible properties of individuals and organizations. It is different in concept and process to private equity (PE), which is all about raising capital from institutional and retail investors.
Both can be used raise funds for any projects or business ventures, invest in new technology, and make acquisitions by taking advantage of certain financial strategies.
Raising Capital, What You Need To Know?
Raising capital for business and other ventures is not an easy task. It requires discipline, commitment, and a realistic strategy. You must also know how much you want to raise and the kind of business you want to do, including how much will go into the different items like equipment, property, acquisitions, and the funding of new technology. You also need to understand what it takes to raise money via asset management or PE and the difference in approach for both methods.
Assets Managers Secrets Used to Raise Funds
Raising capital of any form requires attracting investors who have the kind of resources that are required to make the business venture work. To raise funds using this medium you need to have excellent business skills to be able to convince investors. Invest your own money in showing the investors that you practice what you preach. No one wants to invest in your project when they know you don’t believe in it enough that you want to risk your own money. Show your expertise and knowledge in the industry by becoming a thought leader. Speak at conferences, publish in industry publications, share your thoughts on online mediums like LinkedIn, and be consistent with your approach. Ask for referrals. There are a lot of people out there who have money and want to invest, but they won’t listen to you unless they know you. While cold calling and emailing might be regarded as spam, they are still used by many, and they sure do work. You should research your prospective investors to know if this approach will be an appropriate way to contact them.
Private Equity Strategies for Raising Capital
PE managers utilize a different approach to raising money, compared to assets managers. They understand how complex the processes are and what they need to make investors pay attention to their business proposal. PE is used to raise capital over time through a Venture Capital – This involves investment in a start-up that has little or no experience. Startups who want to get capital from private equities must demonstrate they are promising and have the capacity to succeed. PE is also used to raise capital over time through a Growth Capital – Mature companies with proven business models can raise capital from PE to expand their business operations, finance a major acquisition, or restructure their operations.
Leveraged Buyouts – Private equities provide funds for companies to buyout another company. The goal of leveraged buyouts is to make enough money from the acquisition, which will eventually outweigh the interest paid on the debt. When leveraged buyouts are conducted, financial sponsors are involved, and the assets of the company used as collateral to secure the loan. Fund Of Funds – This involves investments made in other funds rather than on securities, bonds, and or stocks. Investing in funds allow investors the diversity to invest in various funds strategies, thereby hedging their risks. Asset management and private equity require you to have a solid business proposal, in-depth knowledge of your industry, and a great concept. They want to make a profit too and the best way to ensure that is to invest only in the most promising ideas.