Seeking Investors For Your Business
At some point, established and startup businesses may question whether to seek investors. There are pros and cons to bringing investors onboard and our experienced business attorneys at Gantenbein Law Firm can help guide and protect you and your business.
For both established and startup businesses, money and having a good cash flow is why owners usually consider having investors. One of the main reasons small businesses fail is not having that capital and cash flow. Banks and traditional lenders are reluctant loaning money to any new business forcing a business to look for investors.
If you’re starting a business, there are initial costs that can be difficult to manage alone. Investors can contribute money to help buy equipment, lease a location and hire employees. Investors know they will also take on a portion of the financial risks as well, and can expect a very large return on their contribution.
Established businesses may want to expand their business. Investors can help with the capital needed for the business to grow and help the business grow at a faster rate.
There are several types of investors. A ‘silent partner’ is an investor who doesn’t have any active participation in the company. The silent partner allows the owner to have complete control over the business. Some investors may feel that having partial ownership in a company gives them partial say and control in making strategic decisions for the business. They may also have high expectations or adverse ideas they want incorporated. Another type investor is the ‘angel investor’. The angel investor will provide funding and participate in the business while the business finds another way to obtain money. Once that other money is obtained, the angel investor ‘cashes out’ quickly. There are also ‘venture capital’ investors. These investors have specific goals and objectives they expect you to meet.
Experienced investors can also bring in good ideas and opportunities that will help your company develop substantially. An investor can become a great mentor - or your worst critic.
We will develop the documents needed to spell out details as to the role the investor will play to minimize any future misunderstandings. Most investors are very savvy and will expect these documents. Our attorneys will guide you through the maze of business agreements and contracts that are necessary to protect you and your company as well as having exit strategies and contracts specifying how, when and where the investor will be paid back.
For more information regarding issues your business may face visit our Denver Business Attorneys webpage.
If you have questions regarding seeking investors for your business, call Gantenbein Law Firm's business lawyers at 303-618-2122 to schedule a consult. Located in Denver, Colorado.