Are you investment-ready?

Geoff SearleThe first step in raising capital is to draft a capital plan for the growth of your business. The company then uses this plan to identify its funding requirements in terms of the amount, the timing, the structure as well as the most appropriate capital mix for business growth. The plan also should look into alternatives to raising external capital.

By defining a company’s business goals and strategies, you find all the costs involved in the company’s business growth plans, including working capital requirements as well as the impact of budget over-runs and product development delays. Then you must take a long and hard look at the feasibility of your plan.

The capital plan and the business plan compliment each other. They both identify issues and risks. You must decide what resources your company requires to grow, when those resources are needed, how to get them — whether they can be sourced from within the business – as well as what the goals are and the value of the equity in the business after the introduction of new capital.

Attracting equity investment is not an easy process. Businesses need to be well-prepared and investment-ready to maximize the potential for success. A failure to be investment-ready is the most common barrier to accessing equity investment. Second chances are rare, so it is important to become investment-ready before establishing relationships with potential investors, regardless of a company’s stage of development or capital needs. Investors can be found among friends, family, venture capitalists, financial institutions and business angels, but wherever the capital is found, they need to know you are investment-ready.

When investors put their money into a company, they invest in the capability of that specific company and its people.

I made a list of issues that a business must address as it works to become investment-ready:

  • Management capacity and systems
  • A suitable business structure 
  • A realistic business valuation
  • Management commitment
  • A business model
  • An investment structure, terms sheet, and exit plan
  • A business and/or commercialization plan
  • An investment proposal (information memorandum) and pitch
  • Management capacity and systems

If you have any question for me please post them in the comment box.

Good luck advancing your business!

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