In 2005 Patrick Bruen became the co founder of Investex Capital, a private investment company that specializes in the development of natural resources in Africa, Latin America, and Asia; specifically, mining and energy assets. Patrick is a son of a coal miner and his motto is “a diamond is just a lump of coal that did well under pressure.” As a private investor, Patrick has trained himself to seek out these varying natural resources to make the best decisions for his investments.
One of Patrick Bruen’s biggest hobbies and interests is logically what he does as a career: investing. Patrick has shareholders stake in multiple natural resources around the world, but his most notable are in diamonds and metals. He is a shareholder of South African Diamonds, which is one of the largest contributors to the diamond industry in the world. They successfully trade polished, rough and colored diamonds around the world. Since the price of gold has plunged about 30% since the summer of 2011, investors are setting their sites on diamonds. Engagement rings have seen a boom in China as more and more Chinese couples are looking to use diamond engagement rings to demonstrate their matrimony.
Patrick Bruen is also is a director and shareholder of a precious metal refinery in the Isle of Man of which the most common are gold, silver and platinum. He is also the co-owner of a Dubai based Aviation Company that specializes in heavy airfreight shipping and handling. With Patrick’s natural career interest in investing, he has also grown an interest for the more explosive and risky biotech, IT and software company investors, or venture capitalists.
Venture capitalists provide capital to high-risk, high potential, growing startup companies. Today, the Silicon Valley is the hub of venture capitalists seeing as a lot of computer technology software and applications have been coming out of the valley for the last couple of decades. Some of the more notable ventures in the recent history have been Facebook, LinkedIn, and Twitter to name a few. In this blog, Patrick Bruen will keep you posted on the latest venture capital news, ventures, and general thoughts on the hot new technology out today.
Patrick Bruen on the Venture capital Stages
For an idea to turn into an actual business it is essential for the company to have a source of funding. Venture capital is a viable option for many new businesses and provides startups with the capital needed to execute their idea. Venture capital is raised through a pool of investors that loan cash to startup companies or businesses that are perceived to have strong long-term growth potential. The funding tends to carry a high risk for the investors because many startup companies to not end up succeeding, but presents an opportunity for high rewards.
From Patrick Bruen’s experience, venture capital tends to be raised from groups of wealthy investors, investment banks and other financial institutions that that pool capital and join partners. For new companies that are not able to raise capital through debt or equity offerings, venture capital is very popular. However, the capital can often come at a very high price as the investors often take a large equity position and representation on the board of directors in exchange for the funding. Venture capital investing involves multiple stages or rounds of capital raising which are outlined below.
1) Seed Stage – This is the first stage of venture capital fundraising and capital amounts are usually modest compared to latter stages. The capital allows the inventors or entrepreneurs to finance the early development of their product which could include product development, market research and building a management team. A true seed-stage company typically has not yet established commercial operations. The capital raised in this round, generally $250,000 to $1 million, is what truly brings the product to life.
2) Early Stage – Financing in the early stage provides companies that are able to begin operations the capital to begin doing so. These companies are not yet manufacturing or selling commercially so this capital allows the company to step up to that point. This process requires a great deal of capital so it is important for the company to raise enough money during this process.
A) Start-up – Capital is used to support product development and initial marketing. At this point the company has assembled management and conducting market research.
B) First Stage – Capital is used to initiate commercial manufacturing and sales. At this point, the product has been thoroughly tested and in some cases already available on a smaller scale.
3)Formative Stage – Includes seed stage and early stage financing.
4) Later Stage – Capital raised in this round is after the commercial manufacturing and sales have taken place but before there has been any initial public offering. At this point, the company has already exhibited significant revenue growth and possibly profits as well. There are three different parts of the later stage:
A) Third Stage – capital raised for major expansion, product improvement and marketing
B) Expansion Stage – Financing refers to the second and third stages
C) Bridge Stage – capital raised to support the company going public and represents the bridge between expanding the company and the initial public offering
5) Balanced-Stage – Includes all financing stages — seed through bridge of the later stage
Copyright: Patrick Bruen