Opportunities funding

In present market environment, where prices of diverse financial and non-financial assets have deeply fallen, many investors are able to spot attractive investment opportunities. However, not many decide to progress with the investment themselves. Why? The answer is simple: the difficulty of obtaining opportunities funding.

Opportunity Funds

Finding an investment opportunity is just first and probably the easiest step in the whole investment process. The next step requires a thorough due diligence on an investment opportunity, as well as acquisition and sale strategy preparation.

If this preliminary analysis makes an investment opportunity still look attractive, an investor needs to decide on an opportunity funding method. This requires finding the right partner, an entity willing to provide opportunities funding, and, at the same time, assume risk and responsibilities associated with the particular investment.

The opportunities funding can be provided by a financial institution, such as bank, or individual entrepreneur, such as high net worth individual. Before any of these entities agrees to provide opportunities funding, often lengthy due diligence process takes place on both the investor, as well as on the investment opportunity.

In order to fulfill all the requirements necessary for obtaining opportunities funding, investor needs to sacrifice a lot of time and effort. These costly resources could be directed towards other tasks that are more enjoyable or simply more likely to create profit for investor.

Due diligence process performed before opportunities funding is provided is likely to require revealing significant amount of information, such as:

  • merits of the investment;
  • planned investment strategy;
  • results of thorough due diligence performed on investment;
  • proof that an asset really represents an investment opportunity;
  • documentation presenting investors economic and financial situation;
  • proof that the investor has sufficient level of experience;
  • opportunities funding amount;
  • description of how the opportunity will create profits;
  • expected time-frame within which profit will be realized;
  • profit-sharing structure, etc.

The result of procuring an opportunities funding is uncertain. Obtaining opportunities funding is not guaranteed even if all required information and documents are provided by an investor. Eventually, investor can never be sure whether the investment opportunity presented to the entity capable of providing opportunities funding will not be used by the third party for his sole advantage.

However, there is a solution for investing in opportunities and not worrying about opportunities funding. It is simply investing in an opportunity fund, which is often not only less risky and timely process, but also very likely more profitable one.

The benefits of this solution over pursuing opportunities funding and performing investment process alone are quite numerous. Firstly, higher profits can be expected. This results from lower required capital input and higher number of investment opportunities that an opportunity fund can access.

Secondly, research, purchase and sale process is much easier and can be performed more effectively by an opportunity fund's manager due to largely developed networks and vast experience. Thirdly, less involvement and ongoing supervision of the investment opportunity are required.

Moreover, an income from the investment in the opportunities fund is likely to be ongoing, not just one-time profit. Another advantage of investing into opportunities fund rather than researching opportunities funding and executing the investment process itself is that some of opportunities funds offer their investors an option to introduce investment opportunities to them in exchange for a flat/commission recognition fee. In this manner an individual investor benefits twice from the same investment opportunity.