Comparing Financial Investors and Strategic Investors

Written by admin on April 16th, 2011

strategic investor is usually possessed of a brandname recognized in many countries. It is the market leaders in certain territories. It has been providing goods and services to users for a long period of time, reliably. This is an important asset, which, if properly used, can attract users. The enhancement of the brandname, its recognition and market awareness, market penetration, co-branding, collaboration with other suppliers – are all the responsibilities of the strategic investor.
3.. The dissemination of the product as a preferred choice among vendors, distributors, individual users and businesses in the territory.
4.. Special events, sponsorships, collaboration with businesses.
5.. The planning and implementation of incentive systems (e.g., points, vouchers).
f.. The strategic investor usually organizes a distribution and dealership network, a franchising network, or a sales network (retail chains) including: training, pricing, pecuniary and quality supervision, network control, inventory and accounting controls, advertising, local marketing and sales promotion and other network management functions.
g.. The strategic investor is also in charge of “vision thinking”: new methods of operation, new marketing ploys, new market niches, predicting the future trends and market needs, market analyses and research, etc.
The strategic investor typically brings to the firm valuable experience in marketing and sales. It has numerous off the shelf marketing plans and drawer sales promotion campaigns. It developed software and personnel capable of analysing any market into effective niches and of creating the right media (image and PR), advertising and sales promotion drives best suited for it. It has built large databases with multi-year profiles of the purchasing patterns and demographic data related to thousands of clients in many countries. It owns libraries of material, images, sounds, paper clippings, articles, PR and image materials, and proprietary trademarks and brand names. Above all, it accumulated years of marketing and sales promotion ideas which crystallized into a new conception of the business.

Technology

1.. The planning and implementation of new technological systems up to their fully operational phase. The strategic partner’s engineers are available to plan, implement and supervise all the stages of the technological side of the business.
2.. The planning and implementation of a fully operative computer system (hardware, software, communication, intranet) to deal with all the aspects of the structure and the operation of the firm. The strategic investor puts at the disposal of the firm proprietary software developed by it and specifically tailored to the needs of companies operating in the firm’s market.
3.. The encouragement of the development of in-house, proprietary, technological solutions to the needs of the firm, its clients and suppliers.
4.. The planning and the execution of an integration program with new technologies in the field, in collaboration with other suppliers or market technological leaders.
Education and Training

The strategic investor is responsible to train all the personnel in the firm: operators, customer services, distributors, vendors, sales personnel. The training is conducted at its sole expense and includes tours of its facilities abroad.

The entrepreneurs – who sought to introduce the two types of investors, in the first place – are usually left with the following functions:

Administration and Control

1.. To structure the firm in an optimal manner, most conducive to the conduct of its business and to present the new structure for the Board’s approval within 30 days from the date of the GM’s appointment.
2.. To run the day to day business of the firm.
3.. To oversee the personnel of the firm and to resolve all the personnel issues.
4.. To secure the unobstructed flow of relevant information and the protection of confidential organization.
5.. To represent the firm in its contacts, representations and negotiations with other firms, authorities, or persons.
This is why entrepreneurs find it very hard to cohabitate with investors of any kind. Entrepreneurs are excellent at identifying the needs of the market and at introducing technological or service solutions to satisfy such needs. But the very personality traits which qualify them to become entrepreneurs – also hinder the future development of their firms. Only the introduction of outside investors can resolve the dilemma. Outside investors are not emotionally involved. They may be less visionary – but also more experienced.

They are more interested in business results than in dreams. And – being well acquainted with entrepreneurs – they insist on having unmitigated control of the business, for fear of losing all their money. These things antagonize the entrepreneurs. They feel that they are losing their creation to cold-hearted, mean spirited, corporate predators. They rebel and prefer to remain small or even to close shop than to give up their cherished freedoms. This is where nine out of ten entrepreneurs fail – in knowing when to let go.

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