Welcome to this week’s installment on raising capital! Head over to our Youtube channel and take a look at these resources from Dummies.com, the U.S. Chamber of Commerce website, and Cayenne Consulting to learn more.
Today we’ve linked you to several really good articles about how to get ready to raise capital, and there are probably an endless supply of books on how to go get capital, what you should do, email campaigns, etc. But we find most companies are not really ready when they first want to go raise capital. They know they need to do it, but, as with everything in life, preparation is the key. So here’s a few points to take a look at when you want to get your company ready to raise capital:
First, this is going to sound strange: improve your personal credit score. Investors are not just investing in the company. They will invest first in the team, second in the company, and third in the industry. So as far as you, the leaders in the team, make sure your personal credit and your personal finances are in good order, because they will check and some may conclude that if you’re not managing your personal finances well then perhaps you won’t manage the business well. If you do have dings against your credit, they’re probably explainable, so get the score up as best as you can and then have good answers for any questions that may come up.
Next, have a good plan. As you know, here at Harvard Grace, we’re always talking about planning and forecasting, so that’s a must. Focus on the financials. Primarily your investor is looking for a return on their capital, so make sure you’ve got a good financial plan in place and and know your numbers. If you don’t know your numbers when you’re talking to investors, it will show, and they will know.
Know your financing options. Do you need to raise debt? Do you need to raise equity? Can any portion of the capital you want be bank financing? Because debt, especially bank funding, is always cheaper than equity, so you want to know your offer and know your options before you talk to any investors or a banker or anybody about your elevator pitch. It starts with your plan, your elevator pitch, several prepared pitch documents, pitch videos, and practice, practice, practice until it rolls off your tongue subconsciously.
All the resources linked above make good points for getting ready to raise capital, which is probably more important than what you do while you’re raising capital. If we can help you with this in any way, just let us know. We’d love to help!