how to raise capital
TRANSCRIPT
How to Raise Capital
Best Practices
Exploit a window of opportunity
Make critical operating investments for which you lack existing resources to fund
Decrease your financial exposure
Why 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
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
Industry & Stage Focused: pursue good matches only
Customers & Vendors Private investors Venture Capital Funds
Equity Sources
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
A strong leadership team is a must Sales makes you credible Profit makes you powerful
Operate with Excellence
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
Subject matter experts AND deal experts
◦ Consultants◦ CEOs◦ Attorneys◦ Accountants◦ Bankers
Build the right Advisory Team
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
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
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
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
3-12 months
Many “no’s”
Investor confidence in Management means a better offer
Process Expectations
Critical path to building substantial wealth
Investors & lenders have plenty of capital & reasonable terms for the best
Be one of the best!
Final Pointers