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When dealing with companies or individuals offering to invest DO YOUR HOME WORK and watch for warning signs for scams.
Ask the investor to provide you references i.e. the names and addresses of individuals or companies who have received funds and are satisfied. Read up on the 419 Scam, upfront fee scams and insured loan scams. Be weary of web based untracable email such as hotmail, yahoo, gmail etc..
Here is a good site to read on how to watch for scams:
www.corpa.com/fraud.html
When dealing with companies or individuals offering to invest DO YOUR HOME WORK and watch for warning signs for scams.
Ask the investor to provide you references i.e. the names and addresses of individuals or companies who have received funds and are satisfied. Read up on the 419 Scam, upfront fee scams and insured loan scams. Be weary of web based untracable email such as hotmail, yahoo, gmail etc..
Here is a good site to read on how to watch for scams:
www.corpa.com/fraud.html
"Seed Financing" is a relatively small amount of capital provided to an inventor or entrepreneur to prove a concept and to qualify for "start-up" capital. This may involve product or service development, market research, building a management team and developing a business plan.
"Start-up Financing" is provided to companies completing product or service development and initial marketing. These companies are generally in business for less than 1 year, and have not yet sold their product or service commercially. Usually such firms have market studies, assembled key management, developed a credible business plan and are ready to do business.
First Stage Financing" is provided to companies that have expended their initial capital and require funds to initiate full-scale manufacturing or servicing.
"Second-Stage Financing" is working capital for the initial expansion of a company that is providing services, or is producing and shipping product, and has growing accounts receivable and inventories. At this juncture, the company may not be showing a profit.
A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.
Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full.
It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.
Since mezzanine financing is usually provided to the borrower very quickly with little due diligence on the part of the lender and little or no collateral on the part of the borrower, this type of financing is aggressively priced with the lender seeking a return in the 20-30% range.
"Bridge Financing" has multiple definitions:
It refers to shorter term, interest only financing
It also helps IPO driven companies to obtain short-term financing that will be repaid when the IPO occurs
To an assisted living, skilled nursing or acute care company, where real estate is an important component of the balance sheet, it can mean financing for properties that are in development and and require some degree of stabilized occupancy before permanent, long-term financing can be obtained
It is also used when a restructuring is undertaken if there are early investors who want to reduce or liquidate their positions, or when management has changed the stockholdings of the former management and are buying out former positions to relieve a potential oversupply of stock when becoming public.
"Management/Leveraged Buyout Financing" enable an operating management group to acquire a product line or business (which may be at any stage of development) from either a private or public company. The acquisition may be for the purchase of select assets or stock.
A hedge fund is a private investment fund open to a limited range of investors that is permitted by regulators to undertake a wider range of activities than other investment funds and also pays a performance fee to its investment manager.
Each fund will have its own strategy which determines the type of investments and the methods of investment it undertakes.
Hedge funds as a class invest in a broad range of investments extending over shares, debt, commodities and so forth.
As the name implies, hedge funds often seek to offset potential losses in the principal markets they invest in by hedging their investments using a variety of methods, most notably short selling. However, the term "hedge fund" has come to be applied to many funds that do not actually hedge their investments, and in particular to funds using short selling and other "hedging" methods to increase rather than reduce risk, with the expectation of increasing return.
Hedge funds are typically open only to a limited range of professional or wealthy investors. This provides them with an exemption in many jurisdictions from regulations governing short selling, derivative contracts, leverage, fee structures and the liquidity of interests in the fund. A hedge fund will typically commit itself to a particular investment strategy, investment types and leverage levels via statements in its offering documentation, thereby giving investors some indication of the nature of the fund.
The net asset value of a hedge fund can run into many billions of dollars, and this will usually be multiplied by leverage. Hedge funds dominate certain specialty markets such as trading within derivatives with high-yield ratings and distressed debt.
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