This is a must step in considering whether to invest in projects or not and the types of projects. In order to be successful in project investment you must determine what types of projects you want to invest in and the degree of your involvement. YOU SHOULD NOT INVEST INTO ANY PROJECT WHERE YOU ARE NOT INVOLVED!!!!!

 

So the first step in establishing your investment criteria is determining whether your style is more towards investing in projects you totally control or not. This is mainly a self evaluation as to what makes you comfortable about your investment. Some of us do not do good when providing people investment and allowing them to use and manage it without major oversight. If you fit into this category of individuals then projects that will be successful for you are ones that either or mainly your own projects or ones in which you are a major partner/player inside the organization. If this is the case then your investment criteria starts with businesses you are familiar with and have enough business expertise that you can add to the the organization in order to satisfy the desire of hands-on management. Therefore, you would only want to entertain projects which you are already a part of or ones that you can and will become part of. This personal style limits the number of projects you will invest in and controlled by the amount of time you have available for the projects you are involved with. Remember that success will only be achieved by having the project team being able to devote 110% of their time and effort to that project. So you should limit the projects you invest in by the amount of time you have. You do not want to become your worst enemy.

 

For some your investment criteria could be limited to one or more industry segments. This is mainly representative of your background, knowledge and experience within that industry segment. For instance, one might be pick health care industries while another might focus towards light manufacturing. This again is a personal selection and shoudl be done where you can provide benefit to the industry segment/organization you are investing in. Spreading yourself to thin due to the amount of projects will result in really no oversight to any.

 

For some, we will want to invest in a number of industry segments and types of businesses. In this case, you would typically have a team of people that provide project management with the expertise in the type of business and industry segment. This is more on the lines of investment bankers.

 

The other consideration in building your investment criteria is your risk appetite. What is risk? Risk for this purposes is defined as the ability to loose all your investment without issues to your overall portfolio of investment. No one should want to or build an investment criteria to loose all of there investments. So you should establish whether or not you will fund the entire project 100% or will require side-by-side investors to share the business risk. This does not mean that on some projects you are the 100% investor and on others you share the risk. What it does provide you is a framework by which to evaluate projects.

 

Some of us will want to have a diversified portfolio. This means that we share across a wide variety of investments that provide asset support and those that are black hole investments. Portfolios could be real estate developments as asset based with others being R&D black hole investments or anything in between. This must be considered in looking at your total investment pool of funds and the rate of return you wish to achieve on those funds.

 

Now the final step in consideration of investment criteria is how you want to fund. This means do you wish to give to humanitarian projects as grants or do you wish only for profit business ventures or something in between. You need to make sure that your pool of projects funds support a successful funding event. So for humanitarian projects where you have enough funds to only start the activity but not be able to see it through for years to come then maybe it is not the right project for you. Maybe you want to have someone with you as a side-by-side investor. For those for profit projects the other consideration here is whether or not you fund via debt with a payback requirement or straight equity or anything in between.

 

Regardless of the final decisions here you must consider all these steps in determining your investment criteria and educate yourself in anything that prevents you from determining this part of project evaluation and selection process.

 

You will need to complete this creation in order that you can review projects effectively to make the proper project selections, funding conditions and structures.

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