how to raise capital

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How to Raise Capital Best Practices

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Page 1: How to Raise Capital

How to Raise Capital

Best Practices

Page 2: How to Raise Capital

Exploit a window of opportunity

Make critical operating investments for which you lack existing resources to fund

Decrease your financial exposure

Why Raise Capital?

Page 3: How to Raise Capital

Debt◦ Short-term: working capital◦ Long-term: property, plant & equipment

Equity◦ Accelerate value creation to capture an

opportunity◦ Long-term growth & sustainability◦ Rescue un-bankable company

Pursue the right TYPE of Capital

Page 4: How to Raise Capital

Balance of “Smart” Money with Cost of Money

Self, family & friends (inexpensive)

Gov’t/Higher Ed Grants/services Banks/Receivable/Equipment financing Investors (smart & expensive)

Pursue the right SOURCE of capital

Page 5: How to Raise Capital

Industry & Stage Focused: pursue good matches only

Customers & Vendors Private investors Venture Capital Funds

Equity Sources

Page 6: How to Raise Capital

You CAN succeed if you◦ Have the right team with the right plan◦ Pursue the right capital (source & type)◦ Understand & engage your audience effectively◦ Work hard & refuse to quit

Get ready to be expertly tested: ◦ Compared ◦ Held accountable ◦ Rejected

Raising Capital: MAJOR Effort

Page 7: How to Raise Capital

A strong leadership team is a must Sales makes you credible Profit makes you powerful

Operate with Excellence

Page 8: How to Raise Capital

Clearly articulate: The important problem you are solving The market opportunity (and obstacles) How you will compete successfully Results you will realistically achieve

Create a Masterful Business Plan

Page 9: How to Raise Capital

Subject matter experts AND deal experts

◦ Consultants◦ CEOs◦ Attorneys◦ Accountants◦ Bankers

Build the right Advisory Team

Page 10: How to Raise Capital

Have experts opine & explain the value

Be reasonable◦ Dilution that gets you where you want to go is

NOT “giving up” a piece of your company

Determine the Valuation

Page 11: How to Raise Capital

Appoint an expert Lead/Negotiator Be prepared to answer important questions Have diligence materials ready to go Create list of “best fit” investors/lenders &

determine best route to contacting each

The Sales & Marketing Process

Page 12: How to Raise Capital

Follow their lead, get on their wavelength Be confident, never cocky Answer questions honestly & directly Don’t “try” to sell Evaluate their “fit” and ability to add value

Investor Meetings

Page 13: How to Raise Capital

We don’t need advice We have no competition Our Plan doesn’t need improving We don’t know who will buy our software

because every industry should want it If we build it, they will come

Deal killers

Page 14: How to Raise Capital

3-12 months

Many “no’s”

Investor confidence in Management means a better offer

Process Expectations

Page 15: How to Raise Capital

Critical path to building substantial wealth

Investors & lenders have plenty of capital & reasonable terms for the best

Be one of the best!

Final Pointers