Tag Archives: company
The Basics of Credit Card Balance Transfers
There simply isnt one of us out there who enjoys paying the high interest rates on credit card balances, no matter how much money you have in the bank or make at your place of employment. I dont know about you, but I always promise myself that whatever I charge during a billing cycle, I will pay off when the bill comes due. But when I open up the envelope from my credit card company, I realize that there are many other places my money could be well spent- and that means my balance doesnt get paid in full, thus resulting in loads of pounds paid in interest. Thats why so many residents of the UK are taking advantage of the financial benefits of transferring their balances on a high rate credit cards to one with significantly lower (or even 0%) interest.
Credit card companies are in a desperate fight for your business, so they offer alluring programs (such as 0% interest on balance transfers for 6 months or so) so that youll take your old credit card balance and place it on one of their new cards. This is all done with the hopes that you will use your new credit card instead of your old one- hence the new company generates any interest on new purchases, not to mention the charges on your transferred balance when the special program expires. They want you to give them your business, never look back, and never again transfer your balance to another credit card company. Their begging can work to your advantage as long as you understand the basics.
There are mainly two types of credit card balance transfers, the first of which involves a very low interest rate, usually 0%, for a fixed amount of time, perhaps from 5 to 9 months. At the expiration of this time period, the companys normal interest rate charges will apply, generally upwards of 15% or more. So be sure to stay on your toes, keep accurate records and switch your balances when the introductory rates expire to get the most out of these enticing rates and programs.
The other type of credit card balance transfers involves a low interest rate, maybe 5% or less, but maintains this same, nominal rate for the entire time required to pay off the transferred balance. Any new purchases will be subject to the cards regular, significantly higher rate (again, around 15% or so), but if you have the self-discipline to not add any additional charges to this card, it can save the hassle of transferring your balances at every 6-month mark and still save you hundreds (or even thousands) of pounds over the life of your credit card balance.
Venture Capital 101 (Page 1 of 6)
I. WHAT IS VENTURE CAPITAL?
Venture capital is money provided by an outside investor to finance a new, growing, or troubled business. The venture capitalist provides the funding knowing that theres a significant risk associated with the companys future profits and cash flow. Capital is invested in exchange for an equity stake in the business rather than given as a loan, and the investor hopes the investment will yield a better-than-average return.
Venture capital is an important source of funding for start-up and other companies that have a limited operating history and dont have access to capital markets. A venture capital firm (VC) typically looks for new and small businesses with a perceived long-term growth potential that will result in a large payout for investors.
A venture capitalist is not necessarily just one wealthy financier. Most VCs are limited partnerships that have a fund of pooled investment capital with which to invest in a number of companies. They vary in size from firms that manage just a few million dollars worth of investments to much larger VCs that may have billions of dollars invested in companies all over the world. VCs may be a small group of investors or an affiliate or subsidiary of a large commercial bank, investment bank, or insurance company that makes investments on behalf clients of the parent company or outside investors. In any case, the VC aims to use its business knowledge, experience and expertise to fund and nurture companies that will yield a substantial return on the VCs investment, generally within three to seven years.
Not all VC investments pay off. The failure rate can be quite high, and in fact, anywhere from 20 percent to 90 percent of portfolio companies may fail to return on the VCs investment. On the other hand, if a VC does well, a fund can offer returns of 300 to 1,000 percent.
In additional to a portion of the equity, a VC expects to have a say in how its portfolio company operates. Ideally, the VC fosters growth at the company through its involvement in managerial, strategic, and planning decisions. To do this, the VC relies on the expertise of its general partners who may be former CEOs, bankers, or experts in a particular industry. In most cases, one or more general partners of the VC take Board of Director positions at a portfolio company. They may also help recruit key executives to the portfolio company.
Its important to do your homework before approaching a VC for funding, to make sure youre targeting the right potential partner for your business needs. Not all VCs invest in start-ups. While some may invest small amounts of seed capital for very early ventures, many focus on early or expansion funding (see section III. Types of Funding), while still others may invest at the end of the business cycle, specializing in buyouts, turnarounds, or recapitalizations.
VCs may be generalists that invest in a variety of industries and locations. More typically, they specialize in a particular industry. Make sure your company falls within the VCs target industry before you make your pitch a VC thats focused on biotechnology start-ups will not consider your request for later-stage funding for expansion of your semiconductor firm. You can often gain insight into a VCs investment preferences by reviewing its website.