,

Venture Capital vs. Private Equity

Venture capital and private equity are often lumped together because both terms refer to firms that invest in companies and exit by selling their investment. However, there are several technical differences between venture capital and private equity funding. 

The main difference between venture capital and private equity lies in the business the investors choose to invest in. Venture capital investors are drawn to the growth potential of young companies whereas private equity investors prefer companies past the growth stage. 

Let’s start with the definitions before we dive into how each works. 

What is Venture Capital?

 Venture capital (VC) is the funding granted to startups and new businesses. Technically, VC is a form of private equity. VC is often associated with small companies that display significant growth potential. Investors are drawn to the high rates of growth and high returns that a company may provide.

This high growth potential is often fueled by elements such as unique innovation or carving out a new industry niche. 

Venture capital is an essential financing vehicle for startups because they may struggle to access funding sources due to their short operating history. VC gives these businesses capital and an opportunity to grow and build credibility. 

How Does Venture Capital Work?

Harvard Business Review estimates that more than 80% of the funds invested by venture capitalists go into building the infrastructure required to grow the business. For example, investors may provide funds for marketing and manufacturing or invest working capital. 

Additionally, investors may provide their expertise in the process of helping the company evolve. Further, VC investors tend to be well-connected and lead entrepreneurs to new opportunities. 

Venture Capital is Not Long-Term

The purpose of venture capital is to help build a business’ infrastructure and balance sheet. Essentially, an investor invests in an entrepreneur’s idea, helps to grow rapidly, and exits. As we said, about 80% of the funds are allocated to the company’s adolescent stage. 

Who Should Pursue Venture Capital?

Venture capital is an attractive option for new companies. For example, companies with a short operating history who are looking to expand their business.

Past the Growth Stage? Let’s Talk about Private Equity

Private equity (PE) is a source of investment capital that comes from high-net-worth individuals or firms that directly invest in private companies. These investments may take the form of:

  • Purchasing stakes in private companies
  • Acquiring control of public companies with plans to take them private and delist them from stock exchanges

How Does Private Equity Work?

Private equity provides companies with easy access to capital as an alternative to traditional financing options, such as bank loans. Traditional financing options may have high-interest rates and a slow approval turnaround. Additionally, private equity may provide the companies with more flexibility.

For instance, companies have the flexibility to use the funding to:

  • Fund new technology
  • Increase working capital
  • Stabilize a balance sheet
  • Make acquisitions

Who Should Pursue Private Equity?

Private equity investors often choose mature, established companies. But why would these established companies need funding? Typically, private equity investors provide funds for companies that are failing to make a profit due to inefficiencies, such as issues with management or manufacturing.

However, companies do not have to be struggling or failing to receive private equity. 

Looking For a Private Investor?

Crivello Capital is a private investment group focused on improving communities and impacting business owners’ lives through capital investment.

Wondering how to get a private investor to give you money? Lucky you, we have the answer right here. 

Then, you can apply for capital in four easy steps.

, ,

What is Venture Capital and How Does It Work?

Venture capital (VC) is a form of private equity that gives investors the opportunity to support the growth of startups and young businesses. VC is often associated with small companies that display significant growth potential.

While such investments can be considered risky, the high returns and rush of helping a startup succeed make venture capital popular among investors.

In fact, according to The Economist, global venture investment is on track to hit a high of $580 billion this year. This figure is almost 50% more than 2020 and is 20 times the VC invested just two decades ago in 2002.

The process of venture capital can be divided into five stages:

  1. Seed stage
  2. Startup stage
  3. Emerging stage
  4. Expansion stage
  5. Bridge stage

Let’s review these stages and how VC funds are used to grow businesses.

What is Venture Capital?

Venture capital (VC) is an attractive option for startups or companies with a short operating history.

It’s defined as “a type of private equity investing where investors fund startups in exchange for an ownership stake in the business and future growth potential.”

Why is Venture Capital Essential for New Companies?

Venture capital is a significant financing vehicle for new businesses and startups. 

Why?

Because new businesses and startups, due to their short operating history, may struggle to access traditional funding sources.

Traditional financial institutions consider several factors in determining whether to offer a loan to a business.

These factors, both quantitative and qualitative, can include:

  • Debt-to-income ratio
  • Cash flow
  • Collateral
  • Industry
  • Credit score
  • Operating history

Many enterprises will not have these qualifications until later on in their business history and are, therefore, often denied loans from banks.

This leaves new companies with a gap in capital as they build their record and grow their company.

Venture capital fills this gap. 

How Does Venture Capital Work?

Venture capital can be split into five stages. In all of these stages, venture capital investors assist with the growth of a business.

The Seed Stage

During this stage, the startup is an innovative idea lacking structure.

Typically, investments during this stage are small and used for expenses such as product development, marketing research, and business expansion.

The goals of the seed stage include creating a prototype or perfecting a service as well as attracting more investors to the venture.

VC can start with the seed stage but doesn’t have to. Some VC investors may begin funding the enterprise at this stage; however, many will join in later funding rounds after the product is developed.

The Startup Stage

In the startup stage, enterprises have developed their product and created a business plan. However, the startup hasn’t necessarily sold any products yet.

In this stage, entrepreneurs need access to funds to drive their business forward. These funds will allow the business to manufacture and market its product. 

Investors may also offer their expertise in the process of helping the company evolve and lead entrepreneurs to new opportunities.

The Emerging Stage

The emerging stage, also referred to as the first stage, is typically the launch of the company. This is when the company will begin to see a profit.

The venture capital from this stage is often used to manufacture and market the product. Because of this, the investments during the emerging stage are usually much higher than in previous rounds.

According to Harvard Business Review, 80% of the funds invested by venture capitalists go into building the infrastructure required to grow the business.

The Expansion Stage

This stage, often referred to as the second and third stages, refers to when the company experiences exponential growth.

During this time, the enterprise will need additional funding to keep up with the demand for its products and services. The business will grow in various ways during this stage, such as with product diversification and market expansion.

Additionally, the company will likely begin seeing profitability and will utilize venture capital funding to create a stable, profitable future.

The Bridge Stage

The bridge stage is the final phase of VC financing. This stage is when the company has matured and established its infrastructure, product, and customer base. 

Many venture capital investors may choose the bridge stage as the best time to sell their shares. After all, they have successfully achieved their goal of helping to build and grow this enterprise.

Looking for Venture Capital Investors?

Crivello Capital is a private investment group focused on improving communities and impacting business owners’ lives through capital investment.

At Crivello Capital, we partner with companies that require investment to build, grow, or obtain more inventory. Our goal is to be the source of capital business owners need, providing flexibility where banks are rigid, and common-sense standards of lending where other private lenders are bound by red tape from their boards.

Our process is simple. We rely on data, research, due diligence, and our capacity to see and understand business opportunities. We are agile, flexible, and straightforward.

Read on to learn how we can help you build your business or apply for capital in four easy steps. Then, read on to learn how to find a private money investor.

,

How to Write an Impactful Business Plan

We get it—writing an impactful business plan can be daunting. But, it doesn’t have to be. An impactful business plan should explain your business’s:

  • Goals
  • Products or services, and
  • Finances

Nearly 70% of business owners recommend writing a business plan before you start a business. Why? An impactful business plan can provide a variety of benefits that go beyond simply presenting your business to investors.

Did you know that business owners with business plans are twice as likely to grow, earn investments, or secure loans than owners without? Further, businesses with a plan grow 30% faster than businesses without.

Although every business owner should have a written business plan, many don’t. In fact, according to QuickBooks, more than 10% of prospective business owners do not intend to write a business plan; another 10% aren’t sure if they need a plan.

So, let’s discuss how you can write an impactful business plan.

What Is the Purpose of a Business Plan?

First, what is the purpose of a business plan?

A business plan is a document that defines a company’s objectives and provides a roadmap for how it will achieve these objectives. This plan should identify the financial, economic, and technical feasibility of the business. 

When writing a business plan, entrepreneurs should consider these steps:

1. Write an executive summary

2. Describe your business

3. Identify your business goals

4. Explain your products and services

5. Do your market research

6. Outline your marketing and sales plan

7. Include a financial analysis and projections

8. Include an Appendix (when applicable)

Let’s talk about each step in more detail.

Write an Executive Summary

An executive summary is the first page of your business plan. Similar to writing an introduction of a paper at the end, consider writing your executive summary after the rest of your plan.

Why? 

This way, you can go through the plan and identify only the most important points. This will help focus your summary and ensure you include only the most relevant details.

For example, entrepreneurs may want to consider the following in an executive summary:

  • Objective
  • Target market
  • A description of products and services
  • Marketing and sales strategies
  • Funding and budget allocation for the processes and operations
  • Analysis of competition

Describe Your Business

This section should be short and to the point.

Your company description should include your business’s registered name as well as bigger-picture ideas (i.e. what your business does and why it is unique).

When you describe your business, those reading your business plan should have a clear understanding of your business’s place in the market and what it provides.

Identify Your Goals

The goals in your business plan should be both short and long-term.

If you are looking for an investment, use this section to explain how you will use the funds to grow your company.

Explain Your Products and Services

This section is your opportunity to go into detail about the products and/or services that your company offers. Consider including:

  • A description of how your product or service functions
  • Pricing models
  • Your target demographic
  • Sale strategies
  • Your supply chain and distribution strategy
  • Any current or pending trademarks associated with your company or product

Present Market Research

In this section, discuss your competition and what sets your company apart. Consider explaining what competitors do well and how you will do it better.

Investors and lenders will be particularly interested in this section. This considered, we recommend putting in the time to compile accurate, complete research.

Discuss Your Marketing Plan

Now that you’ve introduced your product, explain how you will sell it (AKA your marketing plan!)

Consider discussing how you will build a loyal base of customers and get new customers to purchase your product.

Include a Financial Analysis and Projections

If your business is a startup, you may not have much information to provide here. However, if your business is a few years old, you can include information such as profit-and-loss statements, your net profit margin, and your accounts receivable turnover ratio.

You may also want to include a:

  • Sales forecast
  • Cash flow statement
  • Expenses budget

Include an Appendix

You can include any additional information in an appendix.

An appendix, according to Nerdwallet, can include “resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts and personal and business credit history.

“If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.”

Looking for Capital?

Apply for capital with Crivello Capital, a privately held investment group. 
At Crivello Capital, we only pursue opportunities we believe provide attractive risk-adjusted returns. Read on to learn more about our company and mission, or to learn how to make a successful pitch deck.

,

Why Private Lending is a Solution to Rising Interest Rates

In June 2022, the Federal Reserve raised its benchmark interest rate by three-quarters of a percent. This increase was the biggest change since 1994 and will influence aspects of the economy including inflation, recession, as well as consumer and business spending.

With this increase in interest rates, borrowers are left to wonder what the best way is to access funds to support their venture. We have a solution: private lending. 

Why is private lending a solution to rising interest rates? The answer is simple: private lending provides borrowers with more in a high-interest rate environment – more experience, more flexibility, and more lenient requirements.

Since honesty is at the core of everything we do, we’ll be honest: traditional financing options, such as bank loans, will charge high rates without offering these advantages.

Let’s dive into how private lending can be a resource in a rising interest rate environment.

Why Are Interest Rates Rising?

In an effort to reduce inflation, the Federal Reserve began withdrawing its support for the economy in June 2022. The process of quantitative tightening resulted in the highest interest rate increase in nearly three decades. 

What Do Rising Interest Rates Affect?

According to Investopedia, rising interest rates affect the economy by influencing:

  • Stocks
  • Bond interest rates
  • Inflation
  • Recessions
  • Consumer and business spending

The effect of high-interest rates on borrowers is straightforward: borrowing will cost more. That’s why it’s important to get the biggest bang for your buck with the added experience and flexibility that private lending provides.

Advantages of Private Lending in a Rising Interest Rate Environment

Borrowers can utilize private lending as a resource in a rising interest rate environment. Private investors provide several advantages over traditional lending options, such as banks or credit unions.

Private Lending Has Fewer Requirements

Traditional financial institutions consider several factors in determining whether or not to approve a loan. These factors, both quantitative and qualitative, can include:

  • Poor debt-to-income ratio
  • Inconsistent or low cash flow
  • Insufficient collateral
  • Industry concerns
  • Low credit score

While private investors may also consider these factors, they tend to be more lenient. Private lenders are influenced by the potential of the enterprise over the credit history of the borrower.

Read on to learn what to do if you’re unbankable, here. (Spoiler alert: we have options for you).

Private Lending Offers Fast Approval Turnaround

Private investors provide quicker approval turnaround than traditional lending options like banks and credit unions. A traditional lender may take weeks or even months to approve a loan. Private investors can offer borrowers access to funds in days.

Private Lending Brings the Investor’s Experience

Interest rates peaked at around 16% in 1981. For the next four decades, rates maintained a steady downward trend until hitting a low of about .05% during the COVID-19 pandemic. Since that low, rates have been rising.

Because of this long-term downward trend, many modern business owners and entrepreneurs may not have experience in a high-interest rate environment. 

Private investors can serve as an alternate resource and help borrowers successfully navigate the high-interest rate environment. Traditional financing options, such as banks, do not provide the same service. 

Private Lending Provides Flexibility and Loan Options

Private lenders offer a variety of loan options as well as a range of variables within each loan. This allows borrowers to choose which type of loan will work best for them and their business. Additionally, private investors provide the borrowers with the opportunity to select the rates and terms they want.

For example, alternatives to bank loans may include:

  • Lines of credit (LOC)
  • Hard money loans
  • Asset-based loans
  • Bridge loans
  • Working capital loans
  • Factoring

Learn more about alternatives to bank loans, here.

Private loans can be an attractive alternative to bank loans as they are time-efficient, flexible, and, in the approval process, often prioritize collateral or projects over credit history. These are all advantages that have become increasingly significant with the current rise in interest rates.

Looking for a Private Lender?

Entrepreneurs don’t have to give up on their ventures because of high-interest rates. Crivello Capital is here to help: no red tape, no endless forms–just fast flexible funding. 

We invest in businesses whose capital needs and risk profiles match our tolerance and appetite.

Apply for capital in just 4 simple steps.

Learn more about Crivello Capital and how we can help fund your business, here. Then, read on to how to get a private investor to give you money, here.

,

Pros and Cons of Opportunity Zone Investments

Opportunity zone (OZ) investments have an array of pros, ranging from deferred or reduced capital gains tax to tax-free appreciation. However, as with any investment, opportunity zone funds also have a few cons, such as a limited track record and a high buy-in.

The Tax Cuts and Jobs Act of 2017 created opportunity zones to spur development within these communities through incentivizing investors to invest capital into them. Taxpayers may defer tax on eligible capital gains by investing in a Qualified Opportunity Fund and meeting the associated requirements.

Read on to learn more about the pros and cons of opportunity zone investments.

What is an Opportunity Zone?

An opportunity zone (OZ) is a community with economic disadvantages. The federal government recognizes this community as low-income and in need of an influx of capital.

The purpose of OZs and their associated tax incentives is to encourage long-term investments in distressed communities. These investments can lead to an increase in local jobs and economic growth.

Read on to learn how to attract investors to your opportunity zone.

What is a Qualified Opportunity Fund?

A Qualified Opportunity Fund (QOF) is an investment vehicle organized to drive investment in OZs. When investors put capital into the fund, the community is revitalized with the funds and the investor can defer tax on eligible gains.

What are the Pros of Opportunity Zone Investments?

Since their origin following the Tax Cuts and Jobs Act of 2017, opportunity zones have proven to have a few pros. In this list, we’ll discuss some advantages for both the investor and the community.

Deferred Capital Gains Tax

Capital gains are a constant in the investment world. However, OZs provide investors with a loophole that allows them to defer capital gains taxes and use the investment to instead generate passive income.

If the investor makes an investment into a QOF within 180 days of incurring capital gains, they can defer the tax on the invested amount until 2026.

Reduced Capital Gains Tax

Investors can reduce capital gains by staying with qualified OZs projects for years. For instance, a five-year investment reduces the original amount taxed for capital gains by 10%. If the investor keeps the money in the QOZ fund for an additional two years, the capital gains reduction increases to 15%.

Appreciation Without Taxes

If investors keep their investments in the fund for 10 years, the appreciation in the opportunity zone fund investment is not subject to capital gains tax. To clarify, investors must still pay the taxes on the funds from the original investment but there are no additional taxes on the profits derived from the opportunity zone project over the decade.

Opportunity Zones Help More Disadvantaged Communities Than Past Programs

There are currently more than 8,860 designated OZs throughout the United States. This figure far surpasses the number of qualified communities in any past investment incentive program.

Opportunity Zones Bring Funds to Minority Communities 

32 million Americans call opportunity zones home. Of those 32 million, the majority—an estimated 56%—are minority communities. In fact, 30% of those living in OZs are Latinx communities and 24% are African American. Further, 294 OZs fall on Native American lands.

OZs bring capital to areas that may otherwise be overlooked with the intention of revitalizing these areas and improving the lives of the people within them.

The Economic Benefits of Opportunity Zones Will be Long-Term

According to research conducted by the Tax Foundation, “opportunity zones were estimated to cost $1.6 billion in revenue from 2018 to 2027. New regulations stipulate that the program’s benefits would continue through 2047, meaning the program’s revenue impact could increase over time.”

Opportunity Zones Contribute to Environmental Development

In 2019, the United States Environmental Protection Agency (EPA) announced a $65 million grant project to rehabilitate environmental disaster areas within OZs.

What Are the Cons of Opportunity Zone Investments?

In contrast to the list of advantages, opportunity zone investments also have several disadvantages, including:

High Buy-in

The six-figure buy-in is not ideal for many investors.

OZs Aren’t a Short-Term Investment

If you’re looking for active, short-term investments, OZ funds aren’t for you. To earn the high rewards associated with these investments, you have to be willing to play the long game.

Limited Established Track Record

Opportunity zones were created in 2017 and, therefore, don’t have an established history for investors to review and determine risk. While OZs are associated with success thus far, high returns aren’t guaranteed.

Partner with Crivello Capital

At Crivello Capital, we’re focused on making communities better through capital investment. We buy large commercial real estate holdings in urban areas and opportunity zones.

We are focused on the positive impact capital can make in communities and the lives of business owners through:

  • Direct investments
  • Real estate investments, and
  • Alternative lending

Our transparent process and horizontal hierarchy allow us a level of speed and flexibility unrivaled by other investors. Lastly, our no-nonsense approach brings clarity to the transactional world of corporate lending and investment.

Apply for capital with Crivello Capital or read on to learn more about our mission.

, ,

What is a Pitch Deck and How Do You Make One?

A pitch deck is the first tool entrepreneurs use to communicate with investors. First impressions are crucial and can make or break an opportunity. Your pitch deck should be designed to inform, intrigue, and excite investors. 

We’ll let you in on a little secret: the main goal of a pitch deck isn’t to get funding – it’s to make it to the next meeting.

What is a Pitch Deck? 

A pitch deck is a short presentation that entrepreneurs use to describe their business to potential investors. A pitch deck, also known as a start-up or investor deck, provides an overview of your business plan, products, services, and growth.  

What to Include in a Pitch Deck (and How to Make it to the Next Meeting!)

Even if you have been communicating with investors prior to presenting your investor deck, this is your chance to take the connection to the next level. The information in your pitch deck should be accurate, concise, and up-to-date. 

Create a Clear Cover Slide

For your cover slide, think: clean, crisp, and simple. Include your company name, logo, name, contact information, and tagline. Focus on minimal design elements that will intrigue investors without distracting from the essential information you are presenting. 

Introduce Your Business

This is an important slide. You should introduce your business, what it does, and why investors should invest in it. Here’s the trick: keep it clear, confident, and short.

Describe Your Business in One Sentence

We challenge you to try to describe your business in a tweet: 140 characters or less in language that your parents would understand. For instance, “We’re the Tesla of the investment banking industry,” implies innovation, luxury, and success.

Additionally, businesses often include a specific unique value proposition in their first side. 

Know Your Unique Value Proposition

A unique value proposition refers to the value a company promises to deliver to customers should they choose to buy their product. The goal of this statement is to convince the customer that their product or service will add more value or better solve an issue than similar products or services.

Entrepreneurs include this information in a pitch deck to show investors why their product is different from others and how they will convince customers to buy it. 

Describe the Problem Your Business is Solving

If your business isn’t solving a problem, you might have more issues than trying to put together a pitch deck. 

Consider introducing your problem with a story or in a way that investors can relate to. They’ve likely seen all the stats before– what makes your product different?

Define what the problem is and who it affects. 

Explain How Your Product is a Solution

Now that you’ve covered what the issue is and who it affects, you can explain to the investors how your product will solve this problem. This can also lead you to why your product will make the investors money. 

Demonstrate What Your Product Does

Provide proof that your product works. Consider adding statements from clients, specific scenarios in which the product worked, and visual elements such as photographs, graphics, or video of a demonstration.

Present Your Business or Revenue Model

This is your opportunity to explain to potential investors how your business will make them money. Consider these questions:

  • How much does it cost to make your product or provide your service?
  • Is this amount at all flexible? If it is, how so?
  • How much will you charge?
  • How does this pricing compare to your competitors?

Expand on Your Business’ Target Market

In this slide, describe who your ideal customer is and how many of them there are. 

Explain How You Will Market Your Product to Your Target Audience 

Include a brief description of your marketing plans to provide insight for the investors on how you plan to sell your product. You may choose to divide your market into groups and offer different strategies for marketing your product to them. 

For example, let’s say you are selling a foldable laptop and solving the problem of laptops being inconvenient to carry outside of the office. 

You may target Generation Z consumers by showing an influencer taking this laptop from bed to a coffee shop to an airport to a hotel resort because Gen Z trusts influencers, travels the most out of any generation, and prioritizes flexibility in the workplace. 

You may target millennials by appealing to their values because millennials often consider their social impact and want to align themselves with companies and products that are making a difference. In fact, 73% of millennials state that they are more willing to invest more in a product if it comes from a sustainable brand. 

Investors will want to see this research as well as research specific to your target market and product. However, remember to keep it short and only present the most relevant information. 

Provide Information About the Competitive Landscape

Answer some of the following questions:

  • Who are your competitors?
  • How do your competitors serve your target market?
  • How does your product or service compare to the competition?
  • What makes your product different from the rest of the competition?
  • What advantages do you have over these competitors? 

Financials: Show Them the Money

Include your sales forecast, income statement, and cash flow forecast. The information in this slide should be limited – no spreadsheets necessary. Limit yourself to profits, expenses, sales, and customers. 

Additionally, try to keep any projections realistic. You don’t want to scare off investors by including an overly optimistic projection; you might just make yourself look like you don’t know what you’re talking about. Instead, use past data to accurately predict growth. 

Talk About the Investment

Your investors need to know exactly what you are looking for and how you plan to use it. Further, include how the investment will help you to achieve your goals. 

Other Tips to Make A Successful Pitch Deck

Present High-Level Ideas

Your pitch deck should include high-level ideas and an overview of your business. Avoid details that may distract from the main points you are trying to get across to the investors.

Tell a Story

Focus on a story over statistics. While statistics are important to include in your pitch, you want to avoid presenting an excessive amount. Too many numbers may make your pitch boring and distract from the numbers that matter the most. 

Be selective with which statistics you include and tell a concise, relevant story with your pitch to help investors remember you.

Break Down Ideas

Try to limit yourself to discussing one idea per slide: what your product is, what the problem is, who the target market is, etc. Don’t shove multiple ideas into one slide if you find yourself with too many slides. Instead, look for information to cut out. 

Keep Your Pitch Deck Between the Correct Length

Your presentation should be between 10 and 14 slides and never more than 20 slides. 10 is acceptable but may cause your slides to be too crowded, so we suggest somewhere in the 12 to 14 range. 

What to Ditch in Your Deck: Elements Not to Include in Your Pitch Deck

Now that we’ve discussed what should be included in your deck, let’s talk about what shouldn’t. Here are a few examples:

  • Overly detailed or distracting visuals
  • Long paragraphs of text
  • Spreadsheets
  • Bullet points or long lists of statistics
  • Small or hard-to-read fonts. That scrolly cursive might look cool on your computer, but an investor shouldn’t have to squint to read the information on your slide. Stick to large, basic fonts. 
  • Unnecessary details
  • Too many slides. You want to keep the attention of the potential investors and respect their time. 

Looking for Capital?

Apply now with Crivello Capital. 

Crivello Capital is a privately held investment group. We focus on private credit and private equity investments in real estate, media, tech, and other business opportunities. We only pursue opportunities we believe provide attractive risk-adjusted returns. Learn more about our company and our mission, here.
Read on to learn how to find a private investor, here.

,

How to Get a Private Investor to Give Me Money

Although private investors can fund many types of loans, they most commonly fund personal loans and real estate loans.

For business owners, private loans can be an attractive alternative to bank loans as they are time-efficient, flexible, and, in the approval process, often prioritize collateral or projects over credit history.

Read on to learn more about private investors and how to get a private investor to give you money. 

What is a Private Investor?

A private lender or private investor uses their private capital to finance investments. Private investors work directly with borrowers and are not affiliated with a financial institution.

In terms of real estate investments, private investors can be used for both long-term and short-term investments. For example, a private investor may:

  • Help fund short-term repairs for a flipped property
  • Or, provide a long-term investment to give a property a facelift before refinancing into a permanent mortgage

The Benefits of Using Private Investors

Private investors provide quicker approval turnaround and more lenient restrictions when compared to traditional lending options like banks and credit unions. A traditional lender may take weeks or even months to approve a loan, whereas private investors can offer borrowers access to funds within mere days.

Additionally, private investors may prioritize the project or collateral in deciding whether to extend a loan to the borrower, instead of only taking factors such as a poor credit score into consideration.

Now that we’ve covered what private investors are and the benefits of using one, let’s answer the question we all know you came for.

How Do I Get a Private Investor to Give Me Money?

We’ll break down the process of borrowing funds from a private investor into seven simple steps.

Understand Private Loans

First, you need to understand private loans. Private loans work similarly to traditional bank loans: The borrower applies and if approved, receives funding, spends this funding on a specific project, then pays the borrowed amount back in installments with interest.

Organize Your Materials

The borrower should know what financial information the private investor will need to complete a transaction. Have this information organized and readily available for a better shot at getting the money you need.

For example, when it comes to real estate, a private lender would likely want to review the property they’re investing in. The borrower should have these details prepared ahead of time.

Prepare Your Pitch

This is where you create your pitch, which should include a company overview covering your story, education, goals, experience, past accomplishments, and business plan. For instance, if you are a pro house flipper, you should consider including successful property flips in your pitch.

Network and Spread the Word

When researching private investors, you may notice the terms ‘primary circle’ and ‘secondary circle’ thrown around. These terms suggest that many private investors personally know the borrowers through friends or family before they make a deal.

Choose Your Private Investor and Make Your Pitch

Unlike banks, private investors work directly with borrowers. This arrangement means the relationship between the investor and borrower is important. Do your research to find a few investors who might be a good fit for your business.

Anticipate Questions and Answer Clearly

Surely, the prospective investor will have questions.

The private investor may be concerned with profit splits, timelines, or the details surrounding the process of the loan. The investor may ask questions such as:

  • How much money will you need?
  • How will you use the loan?
  • How will you repay the loan?
  • Does your business have the ability to repay the loan and the interest?
  • Have you taken and paid back similar loans in the past?
  • What does your credit profile look like?
  • Can you put up any collateral to secure the loan?

When questions are asked, provide clear, confident, and honest answers. Don’t sweat it–you’ve prepared in advance.

Looking For a Private Investor?

Crivello Capital is a private investment group focused on making communities better and impacting the lives of business owners through capital investment. Read on to learn how we can help you build your business.

Then, apply for capital in four easy steps.

What Are Alternatives to Bank Loans?

The process of applying for a bank loan can be time-consuming and inefficient. Additionally, the strict regulations and underwriting criteria of each lender often result in a loan denial. Luckily, financial institutions aren’t the only options for businesses to access funding. 

Alternative lenders tend to provide more flexibility to businesses–both in the application process and repayment structure–and offer quick approval turnarounds. Through alternative lending options, business owners no longer have to drown in paperwork or cut through mountains of red tape to access the funds they need to continue building their businesses. 

Furthermore, alternative lenders have a significantly higher approval rate for small business loans. While banks approve only about 58% of small business loan applications, alternative lenders approve approximately 71%. 

Let’s review different alternative lending options and how these strategies can be beneficial to your business. 

Lines of credit

A Line of Credit (LOC), also known as a credit line, works similarly to a credit card:

The lender sets a total amount of credit to extend to the borrower. The borrower can access the funds at any time and can borrow up to the maximum limit.

When the borrower pays off the borrowed amount with interest, the limit returns to its original value. 

Benefits of Lines of Credit

LOCs can offer the following benefits:

  • Flexibility by allowing the borrower to decide how to spend the funds
  • Quick solutions to cash flow problems because of their quick approval turnaround and limited paperwork 

Hard Money Loans

A  hard money loan is secured by real estate as collateral. These loans are short-term and offered by individual investors or private companies. 

Benefits of Hard Money Loans

Hard money loans can provide the benefits of:

  • Closing a deal in just a couple of days while banks may over 30-60 days to approve loans
  • Negotiation. Both borrowers and lenders have input on the terms of the deal
  • Prioritizing the value of the property being collateralized itself over other financial factors, such as the borrower’s credit score
  • Less paperwork and red tape than traditional bank loans, giving the borrower more time to focus on their business instead of filling out forms

Asset-Based Loan

In an asset-based loan, the borrower can secure a loan by using assets as collateral for lenders. An asset-based loan may be secured by:

  • Accounts receivable
  • Inventory
  • Equipment
  • Other property owned by the borrower

Benefits of Asset-Based Loans

  • Improved liquidity
  • Limited restrictions and increased flexibility
  • Easier for borrowers to obtain than traditional bank loans, as the lender prioritizes the value of the asset over the borrower’s credit score

Bridge Loans

A bridge loan, or bridge financing, allows borrowers to meet current financial obligations by “bridging the gap” between their financial situation and when they secure permanent financing by providing quick, immediate cash. These loans may be used for specific projects that require fast funding, such as buying a new property or fixing a piece of equipment essential to their business. 

Bridge financing is short-term and can be secured through personal collateral such as the borrower’s home, inventory, or other assets. 

Benefits of Bridge Loans

  • Short-term, quick cash flow
  • Faster application and underwriting process
  • Flexibility for the borrower

Working Capital Loan

A working capital loan is a loan used to finance a company’s daily operations. While other forms of alternative financing may focus on long-term assets pr projects, working capital loans provide the capital necessary to cover a business’ short-term operational expenses. These expenses can include payroll and rent, for example.

Benefits of Working Capital Loans

  • Working capital loans may be a solution for businesses with high seasonality by providing funds to support them in the off-season
  • These loans may also be an asset to businesses with cyclical sales

Private Investors 

Private investing, also known as private money lending, is when individuals or companies lend their own capital to borrowers while securing the loan with collateral, such as real estate. These individuals do not affiliate with any financial institution. Instead, they connect directly with borrowers. 

Benefits of Private Investors

  • Private investors often provide approval time than banks or credit unions
  • Private investors are typically more likely to work with borrowers with poor credit histories

Looking for a Private Investor?

Ditch the red tape with Crivello Capital. 

We believe in a no-nonsense approach: no red tape, no endless forms–just fast flexible funding. Apply for capital in just 4 simple steps.


Learn more about Crivello Capital and how we can help fund your business, here.

, ,

How to Start a Successful Sports Betting Business

If you’re like me, you gamble because it’s fun, it’s a rush, and because hey, why not? Maybe you think you know the industry so well that you can start your own online sports betting business…

The sports betting market is expected to grow by $134.06 billion by 2024, progressing at a compound annual growth rate (CAGR) of nearly 10% during the forecast period of 2020 to 2024. 

Let’s review what you’ll need to know to start a successful sports betting business, starting with where it’s legal.

Where Is Sports Betting Legal?

It’s important to know the law—sports betting isn’t legal everywhere.

In 2018, the Supreme Court lifted the nationwide ban on sports betting in the United States. This decision left the legality of the practice up to each state.

Which States Have Legal Sports Betting?

Thirty states, plus the District of Columbia, have legal legislation allowing sports betting. Five states have legal but not yet operational legislation.

The following states have legalized sports betting:

  • Arizona
  • Arkansas
  • Colorado 
  • Connecticut 
  • Delaware 
  • Florida 
  • Illinois
  • Indiana 
  • Iowa  
  • Louisiana  
  • Nevada  
  • New Hampshire  
  • New Jersey  
  • New York  
  • Michigan  
  • Mississippi  
  • Montana  
  • Oregon  
  • Pennsylvania  
  • Rhode Island  
  • South Dakota  
  • Tennessee  
  • Virginia  
  • Washington
  • Not a state but Washington, D.C.
  • West Virginia  
  • Wyoming

Which States Allow Online Sports Betting?

Of the forty states that allow some form of sports betting, 22 allow online or mobile sports betting.

Which States Are In The Process of Legalizing Sports Betting?

Maryland, Nebraska, and Ohio are in process of legalizing sports betting in some form. North Carolina, New Mexico, and Mississippi have limited sports gambling legalities.

According to the American Gaming Association, Alabama, Alaska, California, Minnesota, Missouri, and South Carolina have active or pre-filed legislation in 2022.

Where Is Sports Betting Illegal or Not Legal?

The following states do not have legal sports betting: 

  • Alabama
  • Alaska
  • Idaho
  • Kentucky
  • Maine
  • South Carolina
  • Texas
  • Utah
  • Vermont
  • Wisconsin

For more information, check out this interactive map from American Gaming Association. (It may be a little easier to read than our lists!)

How to Set Up Your Sports Gambling Business Plan

As with any business, you’ll need to set your sports gambling business plan up right. Here are some steps you can take to start.

1.  Get Money

Starting a sports betting business isn’t a cheap startup—but the opportunity to build wealth (if done right) is worth the investment.

You’ll need cash for expenses such as:

  • Building out your platform (mobile and desktop) 
  • Lawyers
  • Insurance
  • Your first three months of wagers

Don’t do this on the cheap. You’re up against DraftKings, Harrah’s, and some very wealthy major players. If your platform is glitchy, unwieldy, or if it crashes, you’ll have some very angry people never coming back, trashing you on social media, and killing all your hard work. 

You get one shot at this launch, it has to be five-star worthy.

Apply for capital at Crivello.

 2.  Decide if You’re Licensing Software (Smarter) or Building (Insane)

If you’re a coder, you don’t understand gamblers.

If you’re a gambler, you can’t code.

If you’re a savvy entrepreneur, you know you should use the wheel that exists; not try to invent a new one.

If you’re a unicorn and can do it all—good for you. 

The bottom line: use license software that you already know works well.

3.  Lock Down the Legalities

Get your gambling license, geofence your app, and do everything you can so that the regulators can’t say you left the garage door open when there’s a break-in. You’re going to need:

  • A hell of an IT department
  • A legal team
  • And some complicated insurance structures (see step one)

4. Market the Sh*t Out of It

As mentioned in the “build or license” section above: You should have one person in your company who is in charge of marketing (not an assistant who also has to get you coffee). Then, outsource your marketing to an agency that knows influencer marketing (see step one… again).

With great potential upside comes great investment.  You should have influencers posting about you, ads running… The works.

Decide what makes you different and reinforce it all the way to the bank.

5.  Beta Test Your Platform with a Select Group

There’s nothing worse than an app that doesn’t use the right terminology for what it claims to be an expert on.

If you build it yourself and your nephew codes in the terms wrong, you’ll look like an idiot. Avoid this by testing your platform first. As we said, you have one shot at this, better make it a good one.

6. Accept Crypto and Have the Capacity for Exotic Wagers and Straight Wagers

Your platform needs to give your audience the options they want. For example:

As a sportsbook maker, you want to attract sharp punters and exotic wager action. High limits and messaging that encourages bets over a buck are going to make you a go-to destination for the real gamblers.

Or, for instance:

You run a gambling platform that attracts savvy betting enthusiasts who like to place complex, interesting bets. While you offer lower bets, $100, $500, and $1,000 bets are most common because this is the place where real gamblers bet.

In addition to knowing your audience, you should be using the correct terminology. Remember that whole ‘not-looking-like-an-idiot-thing’ we talked about?

I’ve included some basic terms below. You’re welcome.

Sports Betting and Gambling Terminology 

Outright Betting: Predicting the overall winner of a tournament or playoff competition.

Moneyline: A bet made if a team will win or lose outright with no point spread.

Parlay: A bet that combines multiple games for a higher payout. The more games, the higher the risk but the greater the payout. In order for the parlay to win, each game must win or push (tie). If any of the games lose, the entire wager loses.

Full Cover Bets: Any bet which consists of all available multiple bets over a given number of selections.

Total Bet (Over/Under): A bet on the combined number of points scored by both teams in a game, including overtime/extra innings.

Round Robin: A tournament in which each competitor plays in turn against every other.

Point Spread: Margin of victory set by oddsmakers to attract bets action on both the favorite and the underdog. A favorite must win by a number higher than the point spread to cover the spread. An underdog can cover by losing by a number less than the spread or by winning the game outright.

Straight Bet: A single wager on an event.

*All gambling definitions sourced from the New York Times. 

How to Get Money For Your Sports Betting Business

Do you remember the first step in setting up your sports betting business? We’ll remind you: Get cash. 

Luckily, there are several options to finance your business. Read on for more about business financing types.

At Crivello Capital, we believe in responsible investments and a no-nonsense approach. Learn more about Crivello Capital and how we can help fund your business by clicking here.

, , ,

How Do Opportunity Zone Funds Work?

Opportunity Zone Funds allow investors to give back to communities as well as earn some impressive tax incentives. There are over 8,760 qualified opportunity zones throughout the United States. Read on to learn what they are and how to invest in one. 

First, let’s break down some common terms.

Common Opportunity Zone Funds Terms

What is a QOZ?

A QOZ is a Qualified Opportunity Zone.  A QOZ is an area that the federal government recognizes as low-income and in need of an influx of capital.

What is a QOF?

A QOF is a Qualified Opportunity Fund. The key is the Q in QOF; you have to qualify, register, and then invest within a set period of time. QOFs are investment vehicles organized to drive investment in the opportunity zones.

What is a QOZP?

A QOZP is a Qualified Opportunity Zone Property – you don’t have to own that property outright to invest; it just has to be doing business “primarily”  in a QOZ.

What is an Opportunity Zone?

An opportunity zone is an economically disadvantaged and/or low-income community that could benefit from investments and revitalization. Under strict conditions, investments in these communities could be eligible for tax incentives through the Tax Cuts and Jobs Act of 2017. 

How Does an Area Qualify as an Opportunity Zone?

According to the IRS, for an area to qualify as an opportunity zone, it must be characterized by either of the following:

  • A median household income of less than 80% of the median household income of its neighbors, or
  • A poverty rate of at least 20 percent. 

What is the Purpose of Opportunity Zones? 

The goal of opportunity zones and their associated tax incentives is to encourage long-term investments in distressed communities. These investments can lead to the creation of more local jobs and economic growth. 

What Are The Incentives of Investing in an Opportunity Zone Fund?

Three tax incentives of investing in an Opportunity Zone Fund are:

  1. Defer federal capital gains taxes owed today for a period of years
  2. Be eligible to receive a reduction in those capital gains taxes
  3. Be exempted from paying future capital gains taxes if certain investment criteria are met.

How Are Qualified Opportunity Funds Started?

According to the IRS, Qualified Opportunity Funds can be started by real estate investors through several methods, such as:

  • Partnerships
  • Limited Liability Companies (LLCs)
  • Corporations 

And, an entity must:

  • File a federal income tax return
  • Be organized to invest in qualified opportunity zone property
  • Hold 90% of its assets in qualified opportunity zone property

Read how to attract investors to your opportunity zone, here. 

How Do Opportunity Zone Funds Work For Investors?

Opportunity zones provide tax incentives to investors with capital gains. Investors get their money back when the value of the property goes up to fair market value. 

When the investor sells in ten years, the capital gains tax they would have paid is forgiven as a big “thank you” from the government for investing in the low-income area. 

What Are the Benefits of Investing in an Opportunity Zone Fund?

Through investing in opportunity zone funds, investors can reduce the total they pay in capital gains tax. Further, if they keep the property for ten years or more, the investor won’t pay taxes on the appreciation value. 

How to Invest in An Opportunity Zone Fund

According to the IRS, investors must transfer cash or property to the fund in order for the full investment to be eligible for tax benefits. Additionally, investors must meet annual investor reporting requirements and time their investment within 180 days of realizing capital gain to receive the tax benefit.

Consider working with a tax or financial advisor to help you file the correct paperwork, ensure you’re following the appropriate rules and regulations as well as guide you through the process of investing in an opportunity zone fund. 

How to Find Opportunity Funds to Invest In

When researching opportunity zones and opportunity funds, investors may be met by a series of hypotheticals but find very few funds that are actively looking for investors. This happens because opportunity funds are excellent tax protection vehicles–and you have to be in the club to get on board.

What investors won’t see is how easy it is to become a registered opportunity fund.  It’s well within the scope of possibility for most high-net-worth investors. 

Interested in being part of our OZF? We should talk.