Business

Most business owners who are raising capital are willing to take capital from just about anywhere.  Investors are a means to an end of meeting capital requirements and scaling a business towards profit.  As Indianapolis is the “biggest small town in America” and the number of investors and amount of private investment capital is limited, certain business owners find looking outside of the state for capital is beneficial.  In my SaaS law practice, for example, I see a lot of companies look beyond state boarders.

I was back on the west coast this past week.  The key purpose of the visit was to meet with two clients on their open business law matters, but I also met with several private equity investors and two angel investor groups whom I know well to discuss potential private placement opportunities.

I found it interesting to hear from these investors what types of out-of-state deals they want to see.  Particularly, when are outside investors willing to look at Midwest deals and when do they feel it is best for those companies to raise capital locally?
 
For example, one open private investment opportunity is for a brewery.  It was interesting to hear investors state that an investment deal like this needs to be done with investors in their own back yard.  People don’t invest in beer businesses because of great returns – they invest primarily for the fun of being part of a brewery.  You can stop by, bring clients and co-workers, and enjoy the product. 

Also, when companies are branded locally (i.e., name of city or region in business or product name), out-of-state investors will be less likely to invest.  The brand sells that a target market is for that region – and the investor has little way to do the due diligence to assess the market opportunity.

Anyway, points to consider when considering out-of-state investors.