Startups Seek Deep-Pocket Investors; but Are There Any That Care?

By Dana Cone.
Updated Jan 26, 2022

LOUISVILLE, Ky. (PRWEB) January 26, 2022 - A well-known former Fortune 500 CEO has recently invested in a startup companya personal investment that does not involve ownership or management of the startup. This individual, says Paul Ford, co-founder and President of DS9 Capital, was a dominant figure in her industry, and is a careful, well-educated investor. Her participation in this still relatively small venture, he adds, could serve as a much-needed model for other wealthy individuals seeking investment opportunities. Multi-billion-dollar situations attract both media attention and institutional investors, Ford explains, but not many are focusing on building companies that have gone from zero to, say, $150 million of enterprise value. The usual investment community simply considers them too small.

Startups seekand occasionally findalternative funding sources. This particular investor, says Ford, is a role model to millions of women of all races. Her investment in a smaller startup speaks volumes about how new founders are going outside the mainstream to find investors willing to take a chance on them.

One of the flaws of todays approach to investing, Ford says, is that startups generally lack the level of return that most venture capitalists want to see before they invest. Ford explains that when venture capital criteria are not met or its very early in the startup creation and theres not enough commercial tractionpre-revenue stagesthen the startup is faced with lesser opportunities for venture capital investing. However, startups do have choices; some of which are:

More Than Money is Needed In addition to money, founders also need to be looking for investors who bring expertise, knowledge and can help the startup check off the boxes needed to grow. Ford calls them potent investors. These are the investors with the necessary experience to help the founder see whats next; to guide them through the steps toward the horizon. These are the people who bring more to the table than just money, to get the founder over the hurdles. This is especially true where a startups focal point matches with domain expertise of the angel investor or family offices core area of expertise and focus. For those potential investors, a start-up that resonates with them based on shared and aligned interest, may be deemed less risky and the investor can help catalyze early success.

These are the people who will tell the founder: Hey! This is how you commercialize, or Hey! Have you thought about this market? Have you thought about partnering with this company? Did you check the boxes of the top things investors will look and ask for? Potent investors will look ahead for you because their area of expertise makes that a natural activity to them says Ford.

In addition to the usual obstacles leaders of startup ventures face, says Ford, minority ownership can make investment funding even more of a challenge. This, he adds, is simply a fact of life that has to be taken into accountthough one that needs to change, as deep inequities persist.

The importance of early-stage financing, Ford notes, is crucial. He cites the case of Robert Disney, a Missouri businessman. In the fall of 1923, he provided a series of loans totaling $500 to his nephews Walt and Roy, who had relocated to California with plans to start a movie company. Without that support, the current Disney entertainment empire might never have existed.(2)

A number of todays promising ventures could meet the same fate given that the current system of corporate financing is simply not working for smaller startups. This creates an opportunity, Ford says, both for well-thought-out startups and high-net-worth individuals. His advice for prospective investors is do extensive research first: understand what the company is, what it wants to do, and what its chances are.

Next, investors should act. One of the problems that needs solving is, can people with good ideas get access to capital on terms that dont require them to lose their businesses? So far, the answer is a resounding yes.

About DS9 Capital: DS9 Capital is a founder-friendly portfolio management holding company and advisory firm focused on building enduring and stable cash-flowing businesses in the insurance, fintech, and healthcare technology space. DS9 is generally focused on frontier technology and service offerings in the insurance, fintech, and healthcare space largely leveraging cloud-based infrastructure, and more specifically on applying our domain expertise to nano-cap sized businesses to expand the value chain for all stakeholders. This value creation typically includes: investment, leveraging our vast resources and networks to create a strategic pipeline for organic growth, and realigning the businesses to optimize commercial and IP assets. Our tactical goal with each of our companies is to leverage our expertise into higher margin and missed revenue opportunities.

1. Types of Startup Investments. Full Scale, 11 Nov. 2021, fullscale.io/blog/types-of-startup-investments/. 2. So Dear to My Heart: Uncle Robert. The Walt Disney Family Museum, waltdisney.org/blog/so-dear-my-heart-uncle-robert.