Why private equity, investment funds, VCs and other types of investors need sector experts
MAXIMPACT BLOG November 20, 2016 Maximpact.com
Venture capitalists, private equity, angel investors and other financial firms play a huge role in economic growth. They stand as support to invention and innovation, fueling ventures with financial and operational support.
To stay ahead of the game and earn attractive returns VC’s, angel investors and private equity continuously look for:
- New investment opportunities.
- To improve, advise and monitor operations of the ventures they have already invested in.
As markets, society, innovation and technology evolves – new sectors and markets emerge bringing new investment opportunities. Identifying and evaluating those opportunities may require specialized expertise.
With time, new markets are forming. We have seen the technology boom in the 90s. The 21st century is bringing about the emergence of social and environmental markets such as affordable housing, biofuels, wind and solar energy sectors where specialized experts are required along the way.
Those subject-matter experts help VC’s, angel investors and private equities to identify market opportunities, trends, barriers, competition, as well as, evaluate potential investment from a technical and operational perspective, generate new ideas and act as advisors to management.
It is not often that investment firms will have their in-house staff to properly vet new investment opportunities. Sector experts provide invaluable insight into new markets. They also help an equity firm understand the future trends of that industry. As most VC’s are looking for long-term investments, sector experts would need to assess factors such as industry evolution, current policies, available technology, and the effect of the macroeconomy on the sector.
Subject-matter experts, for instance water or biomass experts, can be engaged as advisors that can be reached out to when necessary. For example, a venture needs to comply with the new environmental policy that has just been enacted. The subject-matter expert would need to be brought in for assessment to make sure the business complies with the new policy and if not – what actions need to be taken.
For every new investment that works, investment potential in the equity firm increases. Private investors, such as pension funds and family offices, will be more likely to give private equity, VC’s more money in the future.
Doing the numbers on every investment is a crucial part of running a successful equity firm. However, financial diligence is only one of the disciplines that is needed before recommending an investment. Operations and business due diligence must also be conducted for a true assessment.
For instance, feasibility studies should be conducted within the green industry to test every scenario possible before investing in an unproven theory for wind, solar or natural energies. The more precise the knowledge of the experts in the sector, the better.
Having easy access to a pool of such experts is crucial for investment firms, as it saves them enormous amount of time, money, reduces frustration and streamlines their operations.
Click here to access expert directory that covers over 200 sectors and sub-sectors such as renewable energy, clean tech, agriculture, environment and more. Contact firstname.lastname@example.org and their staff will find the expert you need.
After the Deal is Done
After the initial funding is done on a company, sector experts still have a role to play. Once a company is up and running financially, an expert will assist private equity teams in the following ways:
- Strategy & Market Development – Experts in the sector will be able advise a successful market strategy. Sector experts will also be able to inform a VC why a market is developing in a certain way and where the opportunities lie in the future.
- Operations – A sector expert has industry expertise to help a private equity fund develop the proper structure for its products or services to help a company streamline its processes.
- Capital Investments – A sector expert will be able to help management decide where to invest money in the company to properly expand and grow. This will be an essential function for every round of funding, not just the initial round of funding.
- Research & Development – R&D is little more than trial and error without the insights of an expert who already has some experience about what competitors have done in the market and the experiments that are currently being run. Sector experts can contribute to ideas about what R&D efforts will work based on feasibility, demand, trends, industry needs through their extensive practical expertise.
- On Demand Advice – One of the most important aspects of a sector expert within a company is the ability to address problems in real time. Technical advise and second opinion for certain challenges prove to be crucial to success. Start-ups and early stage ventures may not have the budget to hire experts with 30 plus years of experience, but they can and should reach out to them for on-demand advice.
Having the ability to reach out to industry experts and advisors at any time is an asset to any team.
Access to expertise through Maximpact
Having easy access to subject-matter industry experts facilitates the operating process of private equity firms, VC’s and investment funds.
Maximpact offers access to a wide pool of pre-qualified experts covering 200 sectors and sub-sectors, who have worked on over 3,000 projects worldwide. Equity firms can book a call or hire an expert for a project.
Maximpact acts as a facilitator to VC’s, private equities and other financial institution by:
- Providing free access to pre-qualified experts.
- Providing back-end services such as due diligence, independent valuations and other financial services tailored to assist you in your operations.
- Capacity building – if your team is already working to its full capacity and cannot take on new projects or needs assistance. Extend your capacity when you need it by engaging independent experts to work on projects.
- Investment sourcing – receive new business opportunities in the sectors you are interested in.