The pros and cons of involving your business with a VC

Are you in charge of a new company and want to get your business up and running? Or, are you a start-up with an idea that could bridge the gap between consumer demand and supply? No matter who you are, if your company is in its initial stages and wants to hit the ground running, you require a solid capital along with some top-end financial advisory services, counselling and guidance. Individually, these services will cost you more and will create different points of contact with different agencies involved. This is where venture capital firms come in. They are a type of investment firm that funds a start-up’s venture while mentoring them throughout their different stages of growth of a company and exit after their investment has been returned.

Here are a few advantages and disadvantages you should consider before making a decision.

• 1.      You get access to their business expertise – Venture capital firms are comprised of seasoned professionals who have hands-on experience in scaling a business from the ground up. This expertise comes handy when a young business has to make key business decisions including financial management, resource management, and strategy allocation.
• 2.      You get access to additional resources – Although on paper, a VC firm provides financial advisory services, most firms will also guide you through the various stages of a business which ensures faster transitioning towards success.
• 3.      You make connections – Venture capital firms are often huge funds that have a variety of companies from different industries in their portfolio. This gives you access to market-wide young innovators and experienced professionals which may present opportunities for you to collaborate with them.
• 4.      You lose decision-making control – Although the financial advisory services and other resources a VC firm brings in is more than appreciated, the investors involved may be too aggressive owing to their years of experience. The size of their investment would have a direct impact on their decision-making power for your business.

To sum up, you should make onboard a venture capital firm depending on your risk appetite and your involvement in the processes and decision-making opportunities.

What makes ESG funds the next big thing in India?

While the ESG funds might be a relatively new concept in India, it actually is slowly catching up with the different financial advisory companies such as asset and liability management firm, and investment banking companies in India. But one might wonder what exactly the ESG funds are and rightly so. ESG is the short form for Environment, Social and Governance, the three key areas and factors that one needs to keep in mind when expanding their business. A way of giving it back to the factors that contribute to your business growth.

The concept of ESG funds is way different from the long-only funds that you hear about. The ESG funds are more relevant when it comes to bigger corporations of business and it has become a criteria for investors to judge whether they should be investing in the said big business or not. The factors include how much they actually are taking care of the environmental issues, whether the employee happiness is taken care of and supported and of course, whether the governance is done keeping in mind all the law and whether all the conflicts that arise are being taken care of the way they should be.

When we talk about the social factors, it also includes the kind of relationship that is maintained with the suppliers, traders, the vendors as well. Here, the happiness quotient of the employees is seen and based on which, we get a fair idea about whether the investors would be ready to invest.

When choosing any financial advisory services, like any of the asset and liability management firms, we usually exercise caution. But when it comes to handling the business as a whole, it actually needs to be properly studied, researched and only then can it really be hired for their future services for our business. You can look up various different articles online for the same.

Why one might need help for financial advisory services?

It is very important that you invest your money properly as a business owner and that too in a proper manner. You will gain enough amounts of profits that also so that you actually move in a much secure direction when it comes to finance. It is true, of course that it is not all correct to always be expect the business owner to have all the knowledge required to make these investments happen. Which is why, for bigger companies, there are investment banking companies that you can rely on to give you all the needed information on the same.

There are even other advisory services such as the wealth management firms, the asset management firms, that help a business and also the business owner in setting it up. The reason that it is important that you talk to some really good financial services agencies is so that you end up getting all the right kind of information regarding the same and when we talk about higher businesses, investment banking firms become the most important factor.

If yours is a business which is a bigger firm or if you are an HNI, then you need to make sure that you get in touch with an investment banking firm to help you grow the charts of success. It is also important that you hire the good ones, the ones that are on top so that you get a reliable and trustworthy consultation done. More than how much amount of investment is done, it is about the quality of investments that is done and which is so important and this is why hiring he right kind of financial advisory service is so necessary for you and your business.

The businesses managed to stay afloat in terms of crisis because of the investments that they had done and the benefits that they were getting out of it was helping.

How is investment banking different from wealth management and what are some of the key differences?

The world of finance is ever-expanding. With it, the range of services organisations and individuals need have also become extremely specific. The core purpose of both investment banking firms in India and wealth management firms is to help their clients manage their assets and/or wealth. However, asset management is the only common ground between these two varied services. Let’s look deeper at each of them to understand what they offer.

Investment Banking:

Investment banking firms in India and over the world usually deal with corporates, governments and institutional investors. The range of services an investment banking firm provides are:

Advising about mergers & acquisitions – Huge corporations and institutions are usually on the lookout to acquire new businesses to increase their portfolio. Investment banks act as a negotiator between the two companies and helps their client acquire or sell a business and help with restructuring the newly acquired business.

Underwriting – When a corporate or an institution wants to raise money by selling bonds, issuing shares or raising an IPO, investment banking firms raise money on behalf of the organisation.

Researching investment opportunities – Investment banking firms in India study, analyse, report and recommend new investment opportunities for their clients and help them earn profits.

Trading – Investment banking firms in India usually have a sales and trading team which helps their client manage money with either equity or bond transactions or both.

Commercial & retail banking – Although not all investment banks have the license to offer banking services, those who have acquired a license can offer services such as deposit placement, accounts for savings, cheque, mortgage and loan services, etc.

 

Workings of investment banks and the difference between investment banks and wealth management

INVESTMENT BANKS

A financial services firm that serves as an intermediary in broad and complex financial transactions is known as an investment bank. When a start-up company prepares for an initial public offering (IPO) or when a firm merge with a rival, an investment bank is normally involved. Big institutional clients, such as pension funds, use it as a broker or financial advisor.

 

WORKING OF INVESTMENT BANKING FIRMS

An investment bank's advisory division is compensated for its services. The trading division is compensated for its business success with commissions. Many have retail banking divisions that make money by lending money to customers and companies, as previously stated.

Financial advisors, brokers, and salespeople are among the jobs available at investment banks. A career in investment banking can be lucrative, but it also entails long hours and a lot of tension.

 

ROLE OF INVESTMENT BANKING FIRMS

Investment banks are best known for acting as go-betweens for businesses and the capital markets. That is, they assist companies through issuing stock in an initial public offering (IPO) or a secondary stock offering. They also help businesses obtain debt funding by locating large-scale buyers for corporate bonds.

 

TOP 5 INVESTMENT BANKING FIRMS IN INDIA

1.   AVENDUS CAPITAL 

2.   AXIS CAPITAL LIMITED

3.   EDELWEISS FINANCIAL SERVICES LIMITED

4.   JM FINANCIAL INSTITUTIONS SECURITIES

5.   ICICI SECURITIES LIMITED

 

INVESTMENT BANKING vs WEALTH MANAGEMENT

Within the financial sector, wealth management and investment banking are two of the most common career paths. Despite the fact that there is a lot of overlap and connection between these two sectors, the two positions are somewhat different.

·         Investment bankers are more likely to work longer hours and earn a higher salary.

·         Individuals are the primary clients of wealth management, while companies are the primary clients of investment banking.

·         There is a lot of overlap between investment bankers and wealth management firms' activities.

·         Clients of wealth management firms are often business owners who may need investment banking advice on business restructuring or potential M&As, as well as access to investment banking products such as initial public offerings (IPOs) or bond offerings.

The real challenge of hiring asset management companies in India

Some of the top asset management companies in India, right now, will bank on the fact that post COVID-19 has left the world of finance and economy in shambles in most of the countries. With the number of people that have lost jobs, it has become increasingly difficult to revive the world of asset management the way it had earlier. Asset management is one of the main aspects of any business. not just for business, asset management is very important when it comes to individual finance as well. Assets are commodities that only add to the value of your wealth and appreciate as the time goes by. These are commodities that make your wealth base and capital stronger and also make you capable of taking decisions regarding expansion. There are different kinds of funds that your fund manager may advice you to invest into. Such as, mutual funds, long short fund, the ESG funds and so on. It is important to note that once you get on the journey to increase and expand your business, you are going to have to dive into it with a lot of research. It is not always important or extremely necessary to hire the top asset management companies in India, but be sure of the firm that you hire since you will be handing them your money. Also, you will also be giving your financial details and background to the asset manager who gets assigned to you. Therefore, it is extremely important that you be careful and do a little background check of the investment or asset management company that you want to hire. For this, you can visit the website, or check out their performance for the previous clients as well. This way, you will be able to decipher whether to hire them or not.

Why do you need an asset management company?

Which asset management company to choose is the biggest question when we have to choose the financial advisory services for our business. When you set up a business, you first do it with the intention of not just earning profits, but to have a steady growth along the way. While the initial capital needed might be put in through investors, eventually, you have to start earning profits for your business. The profits that you get is the money that is left once you have paid your employees, suppliers, dividends to the investors, and the rent (if applicable). This profit you have can be put to either of the two uses. Initially, it has to be about managing the business and putting it to use for the betterment of the business. Second option is to be put in for investment, to secure the functioning of your business, so that you have something known as the back up capital.

To strategically raise this capital, it is important that you hire some great financial advisory services. These services help you understand the journey for your business ahead in terms of the finances. When you meet an asset or a wealth manager, your profile is judged on the basis of the goals that you want to achieve for your business in the future. Your present margin of profits and tentative growth is then analyzed. Having a back up capital is very important for any business, especially since it could be required during the time of expansion, or if and when the business goes into any crisis. The backup capital is what will save the business from falling and will keep it floating, at least sufficient enough to keep the business running well.

Therefore, this is house a company that deals in financial advising helps their customers become self sufficient in times of crisis.

How Does an Investment Bank Affect A Business?

For a company to flourish and expand to become one of the biggest enterprises in the country, they need to focus on not just bringing the business in and retaining it, but also on how they are going to manage the profits and the money that they are getting. Investment plays a major role in the growth of any business. With right investment, you get the returns that you have been anticipating and with that, it will lead to growth of your business too. But how do you know, in the corporate world, what kind of investment will fetch your company the profits and the returns that you want to see?

The answer is, through investment banks. Investment banks are financial corporations that help to raise capital for a company with investment from another company, manage long short funds in India and every where else in the world. These investments are done by the investment banker on behalf of their clients, in order to gain maximum benefit from it for them. Investment banking is a sector that needs the investment banker to be agile about all the on goings in the financial market, have an analytical capability and have good decision-making skills.

Investment banking involves a very volatile market. Which means anything can change drastically very quickly. The investment banker should be able to anticipate these changes before they happen and divert the funds of their clients accordingly. ESG funds in India, although a comparatively newer concept, has garnered a lot of attention from the investment bankers and investors across the country. ESG funds basically tell us about how particular business is being handled and whether ethical measures are followed in running the business. So, as a company owner, you must know the deep impact that an investment bank can have on your business.