How To Raise Money From Angel Investors
Continuation from yesterday…..(What About Crowd Funding)
Angel Investors:
If you are unable to raise capital from previous formats, angel investors should become your best friends. Yet, it comes with a disadvantage. As we move down this capital raising list, the complexity levels and costs associated with raising capital increase substantially. For instance, while in the majority of cases you would be able to have a brief conversation with your friends and family in order to raise capital (at reasonable costs), such an approach would not work with angel investors or venture capitalists.
Before we get any further, let’s define who angel investors are, how to find them and what they are looking for.
Who Are Angel Investors?
They are defined as affluent individuals who provide capital for business start ups, usually in exchange for convertible debt or ownership equity. They can be anyone, but in the majority of cases they are high net worth individuals who have $1 Million or more in liquid investable assets. Some of these individuals advertise themselves as Angel Investors while others do not. Technically speaking, if you have a rich uncle with over $1 million in investable assets, he could be classified as an angel investor.
Where Do You Find Them?
There are four primary ways.
- Look for angel investor groups in your city. Angel investor groups or organizations should be popular hangouts for angel investors in your city. They tend to pull their resources together in order to look for startup companies that match their requirements. They often have meetings and set up presentations/pitches for entrepreneurs and startups alike. And while some of them make capital allocation decisions based on group vote, others do so on the individual basis. Either way, there should be at least a few organizations in your city and you are highly encouraged you to look them up. Simply Google “angle investors in your city” to get started.
- Search Online: There are a number of websites out there that cater to bringing angel investors and entrepreneurs together. com and angel.co are good places to start, but there are many others. These sites do their best to connect companies to capital, but it is not as easy as it sounds. A substantial amount of work on your part is still required.
- Get A High Net Worth Individual List: There are many such lists out there, but I highly recommend going to Infousa.com and using their filters to get the best possible data. Do a search for people in your area with a net worth of over $1 Million and then contact them on individual basis to see if they would be interested in investing in your venture. Make sure you are following all of the rules and regulations associated with contacting potential investors.
- Ask Around: Ask people within your circle of influence if someone A. Participates in angel investing directly and/or B. Knows someone who does. Ask for an introduction or a connection.
What Are Angel Investors Looking For?
While this might not be the case for all angel investors, many of them are interested in two things. First, they would like to generate massive ROI while participating in exciting start ups. Yet, for many it is much more than that. Many angel investors are also interested in participating and mentoring entrepreneurs. Trying to re-live their glory days through the companies they are investing in. Whatever the case might be, most angel investors approach this in a very serious fashion. Meaning, do not approach angle investors unless and until you are ready.
To Be Continued Tomorrow…...(Why Am I Seeing This On A Financial Website?)
The Reason Most People Buy High and Sell Low
Continuation from yesterday……(Buy Low, Sell High, Go Short & Cover)
Warning Signs:
- Most long-term bull market cycles do not last longer than 5 years. Today’s bull market has been in existence since about March of 2009 or 5.5 years. Suggesting that the market might be topping.
- Monthly charts show a possible period of distribution that started in January of 2014. In other words, the market has shifted from a fast moving bull market into a flat market. Suggesting a possible near term roll over.
- Short-term charts suggest that the market is unable to go much higher. Let alone continue on with its bull market. Therefore, a real downtrend shift becomes likely here.
- A massive fundamental overvaluation bubble reminiscent of 2000 and 2007 tops.
- A secular bear market of 2000-2017 is scheduled to complete in 2017.
- A mass psychological delusion suggesting the impossibility of a bear market at this juncture.
Determination: Even thought all technical indicators (short-term and long-term) are still positive at the moment, the market is at a very dangerous juncture. In fact, given the warning signs above, any analyst worth his salt should conclude that the market is likely to be at the top here. That the market is distributing prior to its eventual roll over into a full out bear market. Not a simple correction.
As you can see, this simple analysis yields exactly where in the cycle we are and what we should do next.
Recommendation: Any investor here should go on the highest level of alert in anticipation of a possible roll over. All investors should be ready to liquidate their long positions at a moment’s notice and go short if their trading/investing profiles allow for it.
The following recommendations would apply to specific risk tolerance levels.
- Low Risk: Get out of the market by liquidating all of your long positions. Remain in cash.
- High Risk: Get out of the market by liquidating all of your long positions. Remain in cash in anticipation of a market roll over.
Upcoming investment recommendation:
- Low Risk: Stay in cash while the market corrects. Preserve your capital and buy stocks at 30-50% discounts at the next market bottom. Profit from the next bull cycle.
- High Risk: Be ready to go short as soon as the stock market confirms the start of a bear market leg.
The great thing about the approach above is it works in all market conditions. For instance, investors who are “long only” today or those who are unaware of our current cyclical location would simply hold their positions throughout the duration of the upcoming bear market. Just as they did between 2007 and 2009. Most likely selling at the bottom of the range as the amount of psychological distress associated with losing 30-50% will reach its pinnacle right around the market bottom.
That is why most investors do the opposite of what they should be doing. Instead of selling out and going short at today’s market top, most investors will go long due to their general unawareness, long only bias, faulty technical indicators and to be honest, stupidity. Holding it for the duration of the decline and getting out at the bottom. Even worst, many will go short right before the market bottoms. In other words, they will buy high and sell low.
To Be Continued Tomorrow……
What About Crowd Funding
Continuation from Friday…..(How To Borrow Money)
- SBA Loans: Too many requirements and an application process that might take a while to complete. An unfortunate development since you need to start your business NOW and not 2 years from now. However, it is a good option for many brick and mortar businesses and it is recommended that you look into this if no other options are available at the time.
- Bank Loans: Forget it if you have a startup. Banks typically require a 3 year operating track record and audited financial statements before they would even consider lending you penny. It is an option for more established businesses seeking growth capital and not for entrepreneurs like you.
- Revenue Financing: Finally, if your business is already generating revenue, yet it is doing so on Net 30-60-90 or more payment terms it might make sense to finance your operations and cash flow through accounts receivable financing. Also known as factoring. In essence, financial institutions fund your accounts receivables in exchange for interest. And while the rates are not very competitive, it is an option if everything else fails.
Crowd Funding
As described earlier in “Build a Crowdfunding Campaign”, crowd funding is the most recent phenomena that has proven to be a highly successful avenue for various entrepreneurs to raise money.
If you have skipped the earlier section, it works in the following fashion. Let’s assume that you have a great idea for a business, product or even a movie. What you would do is post the details of your project on sites like Kickstarter.com or Indiegogo.com in order to ask people for contributions or donations towards your cause. If people do like what you are trying to do they might contribute somewhere between $5 and $1,000. And if you get enough people to do that, you are talking about real money.
For instance, let’s for a second imagine that 10,000 people contributed an average of $25 towards your business idea. Well, that’s $250,000 you didn’t have before that can now go towards your business. And for most, that should be more than enough to get going. At the same time, the donations are not really free. Most projects offer either a completed product or some sort of a thing or a perk in return for the monetary contribution. And while it’s becoming increasingly difficult to post projects due to their oversupply, it is definitely an avenue worth pursuing.
Equity Crowd Funding: Based on the Jobs Act of 2012.
Only a brief mention here as this particular point will be discussed in greater detail in the Angel Investor section below. Plus, the water is still a little bit murky on this one as most of the laws governing this type of an equity investment are still being written by the SEC. In simple terms, this law allows entrepreneurs to market and directly raise capital from High Net Worth individuals. As opposed to the environment prior this law, where entrepreneurs could NOT directly market or solicit investment into their enterprises.
To Be Continued Tomorrow……(Why Am I Seeing This On A Financial Website?)
Are You Ready To Buy Some BABA?
9/16/2014 – A strong up day with the Dow Jones up 101 points (+0.59%) and the Nasdaq up 34 points (+0.75%).
The market continues to trade in a tight trading range. Accumulating energy for either a significant breakdown or a breakout. In the meantime, some money managers believe today’s range bound market is due to Alibaba’s IPO this Friday.
“People are pruning their portfolio ahead of Alibaba to get rid of over weights in competitors to raise money for Alibaba,” said Art Cashin, director of floor operations at UBS. “The usual cat and mouse game is bigger than normal.”
Fair enough, but what about the fact that Alibaba’s anticipated valuation being out of sync with any sort of fundamental reality?
“There is some room for some volatility in the market over the next week when they realize that this period of zero rates is going to end,” he said. “But if you take a look at the big picture, rates are still so extraordinarily low that money will continue to flow into equities.” Standing by his prediction of 18,000 on the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) by year end, Siegel again made his case for why the bull market still has legs.
In other words, buy everything in sight. Buy BABA and buy every stock under the sun. And the more speculative it is the better. Yet, maybe…..call me crazy…..just MAYBE this Alibaba IPO will mark the market top. Hmm, definitely something to think about.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE
(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 16th, 2014 InvestWithAlex.com
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Investment Grin Of The Day
Buy Low, Sell High, Go Short & Cover
Continuation from yesterday……(Why You Should Know Exactly Where You Are)
Identify The Cyclical Composition Within Your Time Frame:
Attempt to identify exactly where you are in the above mentioned cycle. Bottom, bull, top or bear. Typically, the longer the time frame you are working with the easier it is to identify exactly what part of the cycle is working in the market at the time. If you are working with short term cycles, simply understand that multiple short-term cycles will complete themselves within the confines of longer cycles. For example, one long-term completed cycle on the Dow would be a bull/bear market of 2002-2009. Yet, it was within the confines is this larger cycle that multiple short-term bull/bear moves developed at the same time. In fact, a day trader might see as many as 4-5 small daily cycles develop on a daily chart.
Identify Where In The Cycle You Are (bull or bear).
Based on the time frames you working with, determine exactly where in the cycle you are. For instance, if you are working with weekly and monthly charts, identify if the weekly/monthly cycle is in a bull or bear market or distributing/consolidating.
Apply Other Time Frames For Confirmation:
Consider other time frames before deciding where in the cycle you are. For instance, if you are trading based on daily charts it would be helpful to consider what weekly and monthly charts are indicating. While the market might be in a 5 day bull run or a bounce, weekly and monthly charts might suggest you are in the midst of a bear market.
Doing all of the above should give a fairly good indication of where in the cycle you are coming in. Allowing you to take an appropriate trading position in the process.
For example, today’s (September 16th, 2014) market environment presents us with a perfect analysis opportunity for the Dow Jones. Here is the sample analysis to show you how to determine exactly where in the cycle we are and what positions or entry points are optimal.
- Desired Trading Time Frames:
Monthly and weekly.
- Cyclical Composition Within The Market On All Time Frames:
- Long-Term: Today’s bull market started in March of 2009. The long-term term trend remains bullish for the time being. All markets are near all time highs.
- Intermediate-Term: Monthly charts remain positive for the time being.
- Short-Term: Weekly charts remain slightly positive. Although signs of possible distribution and downtrend shift are present.
Warning Signs:
- Most long-term bull market cycles do not last longer than 5 years. Current bull market has been in existence since March of 2009 or 5.5 years. Suggesting that the market might be topping.
- Monthly charts show a possible period of distribution that started in January of 2014. In other words, the market has shifted from a fast moving bull market into a flat market. Suggesting distribution.
To Be Continued Tomorrow……….
What Would Buddha Do?
Continuation from Friday……(Killing Stress)
The following quick story about Buddha should drive the point home.
One of Buddha’s disciples (I don’t recall the name, but let’s call him Bob) proceeded to ask Buddha.
Bob: “Master, can I go and preach your message in the city near my birthplace? I believe I am ready. People there have never heard of such a beautiful message before. I shall deliver it to them. “
Buddha: “This is not a good idea. It is a very dangerous place. People there are very angry and violent. You will disturb them with my message. You might even get hurt. They might even kill you. “
Bob: “Master, believe me, I am ready.”
Buddha: “If you are ready, answer the following three questions. First, what will you do if they hate your message? What will you do if they insult you, spit in your face and threaten you?
Bob: “I will thank them for being such wonderful people. All they are doing is insulting me. They could have beaten me, they could have murdered me. Their kindness knows no end.”
Buddha: “And what will you do if they start beating you? If they start hitting you with sticks and stones, what will you do?”
Bob: “I will thank them for being such wonderful people. All they are doing is beating me. They could have easily murdered me on the street like a dog. Their kindheartedness knows no bounds”.
Buddha: “And if they are murdering you, as you are dying, what will you think and what will you say?”
Bob: “Master, I will rejoice, thanking them for releasing my spirit from my physical form. In this physical form, many errors are possible. Now, thanks to their compassion I will be able to move at the higher level.”
Buddha: “Go, you are ready now.”
Think about it for a second. If that is your true state of being, STRESS, FEAR, ANGER, etc…..simply vanish from your state of consciousness. They become physically impossible. And that is available only though meditation.
Walking Meditation:
Walking meditation is a subset of simple meditation described above. It a much more involved and much more difficult phenomena. It is definitely advised that you become proficient in simple meditation first before switching gears and adding walking meditation to your tool set.
Essentially, in walking meditation you are responsible for transferring your higher state of consciousness attained in your regular meditation sessions to all of your daily activities. In other words, one must be fully aware, awake and conscious (the state of NOW) all throughout the day. While brushing your teeth, while eating, while talking to people, while reading, etc…… If you thought meditation was difficult, walking meditation takes it to a whole new level. Yet, the rewards are just as great, if not greater. Plus, if you are able to maintain this state of higher consciousness throughout the day, your eventual enlightenment and/or dissociation from STRESS will come much faster.
In conclusion, this section of the book spent a considerable amount of time discussing all of the tools and exercises available for STRESS reduction or its outright elimination. We started the process with a simple set of rules and living in the NOW. We then made our way towards separation, control and meditation. Ultimately, we made mediation our number one tool for completely eliminating STRESS out of our lives. In the next chapter we will take in depth look at how to transform STRESS and STRESS associated energies into positive forces and do so at the snap of our fingers.
To Be Continued Tomorrow…….(Why Am I Seeing This On A Financial Website?)
Are We In A Bear Market Already or Another 20% Rally Just About To Start
9/15/2014 – A mixed day with the Dow Jones up 44 points (+0.26%) and the Nasdaq down 49 points (-1.07%).
Interesting market action today that yielded a number of divergences. Yet, the number of opinions on what is really going on is even higher. Here are just a few with some of my comments.
- This chart says the S&P could rally another 20%: Same old story. We are in a secular bull market that has another 10 years to ago. Only one problem, bear markets don’t last 9 years. We are still in a bear market that will complete in 2017.
- Record S&P 500 Masks 47% of Nasdaq Mired in Bear Market: About 47 percent of stocks in the Nasdaq Composite Index are down at least 20 percent from their peak in the last 12 months while more than 40 percent have fallen that much in the Russell 2000. So, where exactly is this bull market that everyone is cheering so much?
- Tesla plunges as analysis says too much, too fast: If you really need some analyst to tell you that Tesla’s stock is way ahead of its growth or the rest of its valuation metrics, you shouldn’t be in the stock market. In fact, if you do not understand why TSLA is in a massive speculative bubble here, you shouldn’t be in the stock market either.
So, what is going on? The only thing that I am allowed to say here is as follows. The stock market has been accumulating energy since the beginning of this year and to a lesser extent over the last 3 weeks. Meaning, a very powerful move is just around the corner. If you would be interested in learning which way this market will break (up or down) and exactly when (to the day), please CLICK HERE.
(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 15th, 2014 InvestWithAlex.com
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Are We In A Bear Market Already or Another 20% Rally Just About To Start Google
Why You Should Know Exactly Where You Are
Continuation From Friday……(The Circle Of Profits)
Rule #4: Know Exactly Where You Are At All Times.
By default, you should know exactly where you are at all times. Although it may not be as easy as you might imagine, particularly, if you are new to the whole process.
More or less, the composition of all stock moves can be divided into four distinct parts.
- Bottom formation (accumulation or trauma).
- Bull market.
- Top formation (distribution or blow off).
- Bear market.
Now, the composition above gets fairly complicated once we begin to add multiple time frames and structural patterns to the underlying moves.
For instance, the overall stock market might be in a 10 year bull market, yet it is about to suffer though a massive 50% correction. Or we might be in a 17 year secular bear market, yet the overall stock market might be ready to stage a massive multi-year rally. Just as it did from both 2002 and 2009 bottoms. Further complicating the matter are the different size cycles developing in the market at any one time. Ranging in duration from hourly to decade long. In fact, it is their eventual combination (long and short cycles) that causes the final stock market composite we see on a daily chart.
Is there a way to tell exactly where we are in the overall composition?
Yes, there is. Unfortunately, such a method cannot be described in any reasonable manner, let alone in this short book. It can only come through years of experience and a tremendous amount of work. Particularly, when the above analysis is applied to individual stocks. Not to tout my market timing service, but you might want to take a look at the subscriber section of my website if this type of an analysis is of interest to you.
For the purposes of this book, we can apply the following tools or shortcuts.
Know What Time Frames You Are Working With and/or Trading:
If you are day trader, chances are, you are trading based on weekly, daily, hourly and minute charts. If you are more interested in catching larger moves, as I am, it is highly probable that you are trading based on both long-term and short-term charts. Whatever your situation might be, the first step is to define, without a shadow of a doubt, what it is that you are trading.
In other words, if you are day trading based on your daily charts, stick to that. If you are trading based on weekly or monthly moves, continue on with that approach. Do not move between various time frames until and unless the move is permanent. Why? It is highly probable that constant shifting between different time frames will lead to multiple errors and substantial losses.
To Be Continued Tomorrow…….