A few years ago, we were being bombarded with a hugh amount of daily news on how bad the economic times were. You couldn't view the TV news, read your daily paper, pick up a trade magazine or browse the Internet without seeing gobs of stories relating to the "financial crisis," and about our bad financial times and the "Fiscal Cliff. We had a bailing out of the auto industry, bailout's in the financial industry and bailing out the government sponsored "Fannies."
The stock market was clobbered, the price of gas was unbelievable, it seems that every industry in the country was cutting jobs. Today, the "banks still ain't got no money" (and if they do, they sure aren't going to lend it to small companies that ONLY want to help save the country by increasing the GDP and adding new jobs and bolstering the economy.)
The bad times are over and they really never effected the private financing markets. Over the last five to eight years, we have seen lots of deals being done!!! More so than the 30 plus years we have been in our business. Private investors have bucks, they are liquid -- they don't like the minimum returns they are getting on their CDs. They want to make up for their losses from a few years back. They want some of their investment dollars to make more than the one to three percent. They are looking for some action! This includes startups, expansions and lots of real estate deals.
Private investors are patient. They know that they are not going to make 20% returns in twelve months. But they do know that they can get 20% equity returns, maybe more, over a three to seven year period. They are seeking a higher interest rate on debt deals over the 1-3% on their CDs. They are sophisticated. They don't put all their eggs in one basket. In fact, for most of them are pretty diversified. The funds they invest in private deals usually make up only 5 to 20 percent of their portfolio.
The Baby Boomers have inherited nest eggs. You would be surprised at the large number of private investors who have inherited sizeable sums of funds from their World War II parents. These folks were the product of their parents who came up in the great depression. They scrimped and saved throughout their lives to be sure they had money to pass on to their offspring. The kids (baby boomers) have now received these funds and they too are seeking investments that will boost their financial holdings in the future, pay their children's college education and supplement their lifestyle as they too reach retirement age.
There is a lot of money out there right now and smart entrepreneurs are taking advantage of this to expand and start their projects. Case Western Reserve University in Cleveland, estimates that the U.S. has at least 225,000 active angels who collectively invest some $20 billion a year in new businesses. We would be pleased to assist you in preparing the documentation you need to tap into the private investor markets.