Human Resources Outsourcing Provides Access Private Equity ...

In today?s challenging economy, accessing private equity in the form of venture capital and angel investment is harder than ever. A growing company needs to show that it can handle debt while generating a positive cash flow. By outsourcing your human resources with Total HR Management, covering the basic needs of your employees and protecting your business, you increase the chance that your services company will be able to raise private equity.

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Venture Capitalists and Access to Investment

Before moving forward, here is a basic description of both venture capital and angel investment. A form of private equity investment, venture capital?(VC) is?financial funding provided to early-stage, high-potential, high risk,?growth startup companies by venture capital firms. A perfect recent example is the venture capital investment by Accel Partners in Facebook. The typical venture capital investment is made in the interest of generating a return through an eventual realization event, such as an initial public offering (IPO)?or?trade sale of the company.

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As opposed to a venture capital firm that manages a fund, an?angel investor is an affluent individual who provides capital for a business?start-up, usually in exchange for?convertible debt or?ownership equity. During the initial Internet boom, a small but increasingly influential number of angel investors came together to form angel groups?or?angel networks?to share research and pool their?investment?capital.

The venture capital industry and angel investors are in search of high margin, highly scalable businesses. As a result, it is very difficult to get a services company financed. Even startup companies with profitable and fast-growing services businesses have not been able to access financing. By teaming with a human resources outsourcing company like Total HR Management, service-based companies can demonstrate their consistency and reliability to private equity investors.

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HR Outsourcing and Solving the Investment Puzzle

Creating significant growth is a major challenge small service company?s face. Business owners are forced to hire and take major risks without knowing what future demand will be. By teaming with a human resources outsourcing company, you can provide better benefit packages and access lower insurance rates by adding your workforce to a larger pool of client work site employees. You protect your company with Employment Practices Liability Insurance while partnering with a human resources expert, who is experienced in dealing with the issues and challenges faced by growing businesses.

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By growing with precision, your services company becomes a safer bet for private equity, increasing your chance of obtaining the bridge funding that you need. In the end, human resources outsourcing becomes a win-win scenario. It allows you to focus your energy on growing your business; therefore helping you access potential future financing. Both venture capital firms and angel investors consider effective human resources management to be a plus when performing the due diligence necessary to initiate a round of investment.

Tagged as: Future Financing, Human Resources, Investment, Investors, Private Equity, Risk Management, Startup, Venture Capital

Source: http://www.totalhrmanagement.com/how-human-resources-outsourcing-can-help-a-services-company-access-private-equity-and-venture-capital