This week France, UK, and the US decided to strike targets in Syria. Russia has explained there will be some consequences. Comey will release his book about the US President this week and those are just a few things adding to market volatility.
Market swings are excellent opportunities for traders and unnerving for investors.
How might this impact you?
Well, if your company is in the process of getting outside funding then things might slow down a bit. That will be especially true if the buyers are investors. On the other side of the coin people might want to close a deal faster. Those would have a trader mindset.
Why is this important?
It will let you into the core mindset of your potential investors. Traders tend to think short-term and are more focused on the opportunities of the moment. Investors tend to think long-term. Both are just as valuable because they bring cash into ventures. Yet, one will tend to take it out of the venture sooner. That of course would be the trader because they’re parking their money with you until a better deal comes along. Again there’s nothing wrong with this way of thinking and both types of investors have pluses and minuses.
What to do with that information?
Remember when we’re bringing in outside money there are two things happening within that transaction. We will give up some ownership in exchange for the money. The other person will now not have access to that capital until they take it out or hit their desired return. Most people forget to ask what return the person is looking for because they’re just simply too excited to get access to the extra cash.
Yet, this is a big mistake. If you know that they’re looking to hit a 30% return that is powerful information for you because you’ll know their target.
Bottom-line is make sure you’re aware of the metric that the other person is seeking. It’s important to stay focused on delivering those targets. Not only for you but for them.
We always suggest that companies get outside opinions before finalizing any financing deals. This will help you on a variety of levels. First, they won’t have the emotional attachments that we do as owners. Second, they’ll see some of the things we can’t see. Third, their eyes will also confirm some of the things we see. Finally, nothing really gets done alone and we need outside both positive and negative opinions. That’s what allows us to commit to our choices.
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