Benefits of Establishing Your Own Investment Banking Strategies Fund
Benefits of Establishing Your Own Investment Banking Strategies Fund
The dollar doesn’t buy what it used to. This is an age-old adage that is spoken by everyone from 30-somethings through any age group. While it’s a bit of a cliché, it certainly means that those looking to increase their earnings may need to consider some unique strategies that may not even have breached the conference room door in ages past.
There is good news, however. The age of computers has created an investment landscape that is not only more attractive to those individuals looking to expand their horizons but also more reachable than ever before in history.
This article will expand on some of the benefits of implementing some of these previously unreachable strategies, explain the benefits and some of the drawbacks to be aware of, and provide a foundation for how to get that process underway.
Investment Bank vs Private Equity
First, however, let’s pull back the curtains that were drawn in the introduction. The mysterious strategies we alluded to are those used by investment banks and private equity firms.
You’re reading this article because you are seeking advice you can’t find anywhere else. There are some prime investing opportunities the world over in the realms of equity, fixed income, and real estate. However, getting involved in strategies of investment banks and private equity involves a bit more experience and perhaps even a helping hand to guide you.
First, though, let’s separate the investment bank from the private equity firm just to provide a bit of foundation for those just getting started.
An investment bank is a very specific type of financial institution. They focus on advising businesses and managing cash flow for them as well as raising capital in the private and public markets in various different ways.
You can think of investment banks as the analytical powerhouse of the financial system. They have some of the smartest talent scouring the markets to find out exactly what’s going on and what might happen in the future. In addition, they provide companies with services including IPOs, capital raises, etc. to fund future growth. Combined with their market intelligence, investment banks hold a strong place in timing market exposure.
Private equity firms, on the other hand, usually start with small groups of like-minded investors pooling their funds together for the purpose of investing directly in specific sectors, strategies, real estate, or companies. While the intention is growing capital, they must also go out and raise capital from individuals, other private equity firms, or even investment banks.
Is Now The Time To Start A Private Equity Fund?
Starting your own private equity fund used to be extraordinarily difficult. With the astronomical growth of equities in the last 50 years, one might argue that there hasn’t really been a need to seek relatively risky investments in the world of private equity.
However, growth is becoming harder to find with each passing year, it would seem. Equities are at their peaks again, timing the market to await the next calamity is simply unrealistic. The bottom line is that forming an equity hedge fund is simply no longer worth the time and expense.
In addition to this, we are in the midst of another industrial revolution, though it would be more apt to describe it as a technological revolution. Finding winning strategies was previously so difficult simply because of the mountains of data that had to be crunched by hand or even by simplistic computer programs.
Now, though, the greatest talent is flocking to computer science, and programs can be created overnight that have a specific, money-making purpose.
The short answer is yes, now is the time to consider starting your own investment bank or private equity firm.
What Strategies Can Be Implemented?
If you’re starting your own investment bank or private equity firm, you must have a goal in mind – a strategy that can be presented to prospective investors to raise capital along the way and ensure your vision is realized.
So, what strategies can you use to create your winning strategy if you’re interested in private equity? Here are just a few.
Venture Capital – Venture capital involves early investment in companies looking to raise capital in early stages to carry out their business goals. Obviously one of the most well-known types, this involves significant time and research, not to mention possible follow-up in an advisory role. However, some of the best investors to date got involved in names such as Facebook, WhatsApp, and Uber during very early capital raises.
Growth Equity – On the surface, growth equity investing might seem very similar to venture capital. However, growth equity comes in at a much later stage and allows investors to do more thorough research before investing. Growth equity is all about timing because competition is already out there looking for proven companies. Once a company has a proven concept, they may need the next round of investment to push their concept into the stratosphere. This is the goal of growth equity funds. In the age of computers, this type of strategy can be implemented without even meeting the company leadership.
Buyouts – While it might be self-explanatory, buyout strategies involve the acquisition of companies which are usually public. Most private equity firms fall into this category. There are several methods by which a buyout can occur, but the intention is to take a company private to reorganize and improve the earning potential. Buyouts usually involve an enormous amount of time and effort, including human and capital resources to pursue the goals established at the outset of the buyout. However, successful buyouts can lead to truly lasting and successful growth.
What Value Comes With These Strategies?
When you start looking to establish your own investment banking or private equity fund, you will have access to some of the greatest talent in the world. Professional financial operators might be expensive, but you’ll find that these individuals will be involved in the process regardless of how you go about reaching your goal.
You will also show the market that you are a serious player in the field. If you look at the state of finance, you’ll see that profits are getting pulled in new and exciting directions by the smartest money. When you create your own investment bank, you’re showing your interest in attracting that money and gaining buying power unlike even many larger hedge funds.
While you might be physically involved in the process, you can grow a fund that involves many different cogs which help take emotion out of the decision making. At the end of the day, it’s mostly your money. However, creating your own investment bank or private equity fund leads to a sense of separation that can help you remain objective in achieving your goals.
With all of these benefits combined, you have the potential to generate altogether greater profits than any simple financial instrument. You can invest in fixed income all day, or even function as an intermediary by buying loans from brokers and selling them back to the larger institutions. The types of strategic fund objectives we describe can link together with world-class talent and achieve new highs.
Drawbacks of Setting Up Your Own Private Equity Fund
At the end of the day, these types of strategies involve a higher level of risk. You will be able to raise capital more efficiently, but you will still need to be mindful of the risks involved.
Also, while setting up your own fund might naturally mean you are already aware of such things, it’s important to remember that your liquidity pool is far smaller.
How To Set Up A Private Equity Fund
First and foremost, the business strategy should take precedence when you start planning your new investment bank or private equity fund. We’ve discussed already some of the top-level types, but you’ll need to decide one or several to focus on, especially in the early stages when you try to bring in new money.
The next step involves the business plan and operations setup. This is where an outside party such as BancorpTrust can offer assistance and help you actually create your new fund. Remember that this process is not something that you can accomplish on your own. As a responsible founder, it’s imperative you ensure you have the best advice at the outset of your fund to ensure its success.
After the fund’s goal is established and the legal structure is defined, the next goal involves creating a marketing strategy to start raising capital. You can have the most fool-proof business plan, but without capital it will be dead before it gets started.
The journey to creating an investment bank or private equity fund can be daunting, but never forget that it’s been done before. There are third parties that can help you cut through the red tape and achieve your goals faster.
Remember that the technological revolution is underway and creating exciting efficiencies in the world of finance that weren’t even dreamt of in past decades. The availability of more data as well as the programs required to process it faster means that investment opportunities will only become easier to find for those with the means and drive to go find it.
Are you interested in establishing your own Investment banking fund?
Have you have been thinking about establishing your own Investment Banking Fund without a lot of bureaucratic “red tape”, with electronic payment capabilities– and for a budget you can aﬀord?
You have done your research across the world, compared service providers only to discover that they are either too expensive or simply not worth your time?
Rest assured, BANCORPTRUST (www.bancorptrust.com) is highly specialized in establishing Investment Banks, Offshore Banks, Investment Banking Funds, Real Estate Funds, Credit Unions, Capital Trusts, for its clients across the world. Included is your own private label mobile banking platform, your own API, your own SWIFT code, and your own cryptocurrency trading facilities, yet without the bureaucratic "red tape"...
The management team of BancorpTrust has been in this industry since 1990 and has a track record of successful Investment Bank establishments for over 3 decades.
For a confidential consultation on how to establish your own Investment Bank or Investment Banking Strategies Fund, please contact:
Tel. No: +1-587-430-2692