A Basic Guide to Investing in a Private Company

Whether you are investing in a private business or you are seeking an investment in your own business, you need to understand the fundamental methods of investing. The easiest way to understand these fundamentals is to review how professional investors do it.

This basic guide describes the methods investment professionals use to invest, compares the advantages and disadvantages of each method and describes an investment vehicle that many professionals believe is the best method for investing in private companies. With this knowledge, you are in a much better position to make your own safe investment or to negotiate reasonable terms of an investment in your own company.

This basic guide defines and evaluates the types of securities an investor can use to invest in a private company. Each security or investment vehicle was evaluated based on the ultimate disposition of the company, with respect to the harvesting of the initial investment. Further, serious investors will want to investigate additional investment details on their own so we have included a generous bibliography.

If you are a young company and may wish to raise capital to expand your business from venture capitalists, to Angel investors to your best friends, then this guide is an invaluable tool in understanding the various methods that you can accept investments in your business and the positive and negative aspects from yours as well as your investors perspective, which are by definition distinctly different.