Is Your Placement Agent Reliable and Legitimate?

As I have mentioned in my previous blog, Placement Agents play a great role in  the world of business fundraising. In the past, these agents were hired to introduce private equity funds to venture capital investors or to what they call as Limited Partners (LP), and simply congratulate after a job well done. But today, Placement Agents are highly valued advisors who understand and know their limited partners and the market’s appetite for different approaches. They also advise and assist fund managers and help develop marketing strategies. Their critical responsibility is constantly trying to satisfy their limited partners and value their judgment in order to establish long term and deep relationship.

It is imperative to know if the Placement Agent you are hiring is reliable and legitimate. As you know, there was a significant increase in loan scams on the internet perhaps because of the economic downturn lately. Hiring a Placement Agent for your business fundraising needs a thorough background check so you would know who you are dealing business with. For complete details of standard method to identify potential scammers you may check it at Direct Business Lending website.

The Need of Placement Agent in Business Fundraising

In the world of business fundraising, Placement Agent plays a great role in assisting entrepreneurs, private companies, or institutional investors who are willing and capable of investing a private equity fund. Sometimes Placement Agent is an individual but more often a financial firm and they are usually structured as groups within huge investment banking firms such as Credit Suisse Private Fund Group and UBS Investment Bank, or as separate boutique investment banks such as MVision Private Equity Advisers and Campbell Lutyens.

Placement Agent serves several functions for a company such as raise venture capital, mezzanine capital, or growth capital, as well as raise investor commitments to new private equity funds. In order not to spend too much time seeking for its own business capital or growth equity investors, a company hires a Placement Agent so that the company can aim more attention at management issues rather than focusing on how to raise venture capital.

Placement agents are mostly compensated through fees ranging from 1 percent to 3 percent by the companies or individuals who raise capitals. Sometimes their fees and terms of engagement would extremely vary depending on the length of time to execute the fund and based on the amount of money raised. They bring a myriad of relationships with venture capital investors and they can also advise some existing owners of private equity assets on secondary market sales of their interests.

Ashton Kutcher, an Actor and Venture Capital Investor

Who would know that Ashton Kutcher, a famous romantic comedy actor who starred in some big hit movies such as "Just Married" and "What Happened in Vegas?", is the most prominent entertainment figure in the high technology venture capital game, and invested more than his money into it.

He has become a smart early investor in some of the most notable internet startups such as Foursquare, the mobile social network; Path, a photo sharing application; and Flipboard, a news reading application for the iPad. Foursquare may now be valued at up to $80 million, and one of its investors who stand up to gain most is Ashton Kutcher, an early angel investor in this company. He invested his money with Skype, and earned three times his money when the company was sold to Microsoft for $8.5 billion last month.

He remains discreet with the size of his investments which he has recently been making through a partnership called A-Grade, a partnership between the manager of Madonna, Guy Oseary, and supermarket magnate, Ron Burkle. People in the venture capital world estimated that his investments would range perhaps from $50,000 to $200,000, just like what other early-stage investors would be investing in.

Monica Dodi, a Great Female Venture Capital Investor

Monica Dodi, CoFounder and Managing Director of The Women’s Venture Capital Fund, is an international, multilingual new media entrepreneur with a proven track record in creating, launching and building highly successful global brands. She founded several highly successful companies and even negotiated numerous licensing deals with Fortune 500 companies. She co-founded MTV Europe that later became the fastest channel in the continent. She joined Walt Disney Europe, and ventured a paper product business with a Disney license which was later acquired by American Greetings. She helped Warner Bros launched television channels worldwide and was recruited by Brandon Tartikoff as CEO, to launch an AOL’s Entertainment Asylum which became the fastest growing entertainment destination on the web. Monica has worked with other several venture capital institutions and she is always on the cutting edge of the new media landscape, and has been working with new ventures in virtual worlds, music technologies, and social media as an advisor and angel investor.

Source: Women's Venture Capital Fund

Social Impact of Venture Capital Investment

The Venture Capital industry drives job creation and economic growth by helping entrepreneurs turn innovative ideas and scientific advances into products and services that change the way we live today. Venture capitalists do this by providing the funding and guidance – and by assuming the risks necessary to build high-growth companies capable of bringing these innovations to the marketplace.

Venture Capital is a driving force to our nation’s economy and a driving force for technology. Over the past twenty years, Silicon Valley, a home to many of the world's largest technology corporations, has produced some of the top technology companies in the world.  Some of these companies include Google, Genetech, Sun Microsystems, Intel and Amazon to name a few.  

The continuing growth of information technology industry as well as the software industry was fueled by the emergence of VC industry. Numerous studies have shown that small businesses and entrepreneurism are vital to the health of our nation's economy. In fact, over the last decade, these types of ventures accounted for 70% of economic growth, 75% of new jobs, and represent 99% of all employers.  There are currently 12.1 million jobs at venture backed companies, making up 11% of jobs in the private sector. 

Key Facts:

• Venture-backed companies out performed the overall economy in terms of job creation and economic growth.
•  Venture capital industry continues to grow more new industries virtually from scratch.

• The impact of venture capital continues to grow as regional VC hubs begin to emerge in areas across the country. 

The availability of venture capital exploded after the successful $1.3 billion Initial Public Offering (IPO) of Apple Computer in December of 1980. As venture capitalists continue to support these companies, entrepreneurs have the opportunity to be profitable and create long-term sustainability. With the rising unemployment rate in the United States economy and increasing globalization, VC will play a vital role in the economic recovery of the United States.