Private Equity Versus Smart Equity For THE PROGRAM Company Entrepreneur

Many entrepreneurs seek capital raising or private equity in an effort to take their company to another level. Consider the smart collateral alternative of experiencing a large IT company take an equity stake in your business. This article discusses why that is clearly a superior alternative. If you are an entrepreneur with a small information technology-structured company looking to take it to the next level, this post should be of particular interest to you. Your natural inclination might be to get venture capital or private equity to fund your development. We’ve created a smart equity model made to bring the appropriate capital resources to you entrepreneurs.

It allows the business owner to bring in smart money and to maintain control. We have taken the encounters of several technology entrepreneurs and mixed that with this traditional investment banking merger and acquisition approach and crafted a model that both large industry players and the high-tech business owners are embracing.

Our encounters in the technology space led us to the conclusion that new product introductions were most efficiently and cost effectively the purview of the smaller, nimble, low overhead companies rather than the technology giants. A lot of the recent blockbuster products have been the result of an entrepreneurial work from an early stage company bootstrapping its development in a very cost-conscious low fat environment.

  • China Merchants Zhangzhou Development Zone Innoessen Biotech Co., Ltd (China authorized company)
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The big companies, with all their seeming advantages experienced a higher failure rate in new product introductions and the deficits resulting from wanting to internally develop the next hot technology were substantial. Don’t get us wrong. There were a huge selection of failures from the start-ups as well. For each Google, EBay, Salesforce, or Twitter there are actually a huge selection of companies that either flame out or never reach a crucial mass beyond a devoted early adopter market.

Cisco seeks out investments in promising, small, technology companies which approach has been a key component in their market dominance. They bring what we should make reference to as smart collateral to the high-tech entrepreneur. They purchase a minority stake in the first-stage company with a call option to acquire the rest at a later date with an agreed-upon valuation multiple.

This framework is a brilliantly elegant solution to dramatically enhance the risk-reward account of new product introduction. 1. The involvement of Cisco – resources, market existence, brand, distribution ability is a self-fulfilling prophecy to your product’s success. 3. The business owner gets to develop his business with Cisco’s support at an even more rapid speed than he could by itself. He is much more likely to establish the critical mass necessary for market command within his industry’s short window of opportunity.

4. He gets an exit strategy with a recognized valuation metric, while the buyer helps him make his exit much more lucrative. 5. As a vintage Wharton teacher used to ask, “What can you rather have, most of a grape or part of a watermelon?” That sums it up pretty well. The involvement of Cisco provides product a far greater probability of growing significantly.