Investment as an Engine for Economic Growth
In the U.S., economic growth is primarily driven by consumer spending and capital investment. Put even more simply, economic growth is an expansion of the capacity to produce goods and services. However, for a small to mid-sized company, increasing its pool of capital available to invest in assets, operations, or other essential company inputs can be exceedingly difficult without outside investors. On average, it takes a new company two to three years to become profitable. That window of time is critical to a company’s later success, as it may represent the period of time when a product or service concept is still novel, or mean the difference between sinking or floating. Securing early outside investment is key to enabling a promising but cash-strapped new company to make the necessary hires, purchases, or investments to establish itself for long-term growth and profitability. Investments, in turn, propel economic growth cycles, which may be determined by factors such as gross domestic product (GDP), interest rates, total employment, and consumer spending. For instance, if an economy has spare capacity, the initial rise in investment increases economic growth, causing an increase in sales and profit. As a company’s profitability increases, it becomes willing to reinvest all or part of those profits, creating a further investment input.

Modes of Investing Investing can take several different forms, depending on how much money you’d like to invest, how long you want to remain invested (short term versus long term), the health of the market, and how much risk you’re comfortable with. The most common way to begin investing is to invest in equities like stocks, mutual funds of stocks, and Exchange Traded Funds (ETFs). You can also invest in bonds, which come in a variety of forms including government, package, savings, corporate, and municipal bonds. The key difference between stocks and bonds is that stocks give you partial ownership of the company whose stock you have purchased, while bonds operate as a loan from you to the entity whose bond you have purchased (whether that is the U.S. government, a private company, or another entity). They also generate profit differently. While stocks appreciate over time and can be sold for a profit at some time in the future, most bonds pay fixed interest over time.

Another option is to invest with a Rule 506(b), (c) or (d) Regulation D investment. A Regulation D offering is intended to make access to the capital markets possible for small companies that could not otherwise bear the costs of a normal SEC registration. 506b regulation d investments. Rule 506 of Regulation D provides two distinct exemptions from registration for companies when they offer and sell securities. Companies relying on the Rule 506 exemptions can raise an unlimited amount of money. Or, work with Venture Plans’ dedicated and experienced investment consultants on investments through Regulation A+ crowd funding (an exemption which allows both accredited and non-accredited investors to buy shares from small companies), or Regulation S Offshore Offerings (which provides a safe harbor from the registration requirements of the Securities Act for offshore offers and sales of securities).

Every investment is subject to risk because financial markets can be volatile and company value can increase or decrease over time. However, a wise investment can yield a considerable return on investment (ROI). Investments of these kinds are one of the best ways to put your money to work and see (often rapid) appreciation. And, they often have the added benefit of being taxed more favorably as a “capital gain,” versus being taxed as “gross income,” which is accompanied by a higher tax rate. Whether you’re a retail, institutional, angel, credited, or venture capital investor, Venture Plans’ global consulting services can bring you a large deal flow from a variety of companies and industries. As investment/strategy firm Venture Plans also assists in transactions with relationship-based investors.