Raising Capital in Today’s New Economy

We’ve helped a number of clients develop business plans and raise capital from “angel” investors, corporate entities and venture capitalists during the last 6-8 years. It’s always a daunting process that can be full of pitfalls and require a tremendous amount of work – but it can be done! Here is some perspective gleaned from years t https://npfinancials.com.au/of experience.

The most important rule for raising capital to consider is: it’s never easy to raise capital when you need to! Meaning, investors are inherently risk aversive, can be very picky (a real understatement!) and they are looking for the best deal with the greatest upside and minimal risk.

Rule number two – don’t raise capital! Self fund your company (called bootstrapping in entrepreneur-speak) by finding customers that will purchase your products and services. This enables you to involve your most important business asset in your business from day one – customers!

Rule number three – use the “FAF” or “VMC” methods. Raise seed (early stage) money from your friends and family and/or if you are really committed, pull some cash from a Visa or MasterCard. These methods can and do work for many entrepreneurs – be aware it can be very painful on the back end if your company does not make it!

Angel investors can add so much to your company – they can bring “intelligent capital” to the business. Not only do they invest capital but will very often take an interest in helping you grow the company by taking a Board of Directors seat and/or temporarily assuming a senior management role.

In my experience finding and recruiting a blue chip management team with advanced degrees and a strong corporate pedigree can sometimes kill a startup as quickly as no cash or revenue – yes, they look great in your business plan and venture capitalists love a “strong team.” But, you need “fly by the seat of their pants” manager/leaders who don’t need to grind five sets of scenarios (analysis paralysis) before they can take action – hire entrepreneurial types who’ve excelled in small companies.

Dealing with venture capitalists can be a significant chal