For many small businesses today – investments are very important to both sustain and grow a business and to maintain cash flow… especially in these troubled times. What is also important to understand is that new, start-up companies that are seeking investments to launch a particular technology or process forward are becoming more and more susceptible to problem investors from overseas.
Countries with less mature economies than those of highly industrialized nations such as the United States are typically called emerging markets. The most prominent of these emerging markets are referred to as “BRIC” countries: Brazil, Russia, India, and China. Together these countries represent over 40% of the global population and nearly 50% of the global investments potential. While it is true that both China and Brazil grew more than 7% compared with just 1.1% growth for the United States over these past nine months, it is also true that emerging markets can be extremely volatile in part because:
- These countries may have less stable political, legal, and financial systems
- Liquidity is low due to a relatively small number of investors or a lack of government regulations
- Currency values can swing it violently.
So if you are seeking investments from abroad for your particular new technology or process it is important to understand these volatilities and plan for them accordingly. Finally, it is important to remember that if you are also seeking funding in the form of guaranteed loans or research grants from the United States government, any investments from emerging nations may be looked at as a conflict of interest. And in most cases the US government agency in question will not participate in your venture.
Always seek advice from knowledgeable advisers prior to seeking any investment from outside the United States.
