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Thursday, April 1, 2010
New Businesses | Preparation for Funding
RAISING CAPITAL
Preparing your company to raise capital can become an energy consuming chore for even the most educated and
smartest of Entrepreneurs. One of the reasons is most people have limited experience with Venture Capital or Private Investment
firms and assume it’s much like applying for an LOC at the Bank. Unfortunately that’s not the case and a lot of
people find they needed a lot of help and were not nearly prepared or worse not in the position to begin raising capital in
the first place. Often times you’ll be asked to present specifics on the financial position or daily
operations of your company and other times you will have Accountants and seasoned Executives firing off specific questions
about your funding requirements, inventory ratio or current labor costs etc. I personally have (politely) excused myself from
meetings within the first 15 minutes because I learned to ask the right questions early enough to determine if they were prepared
or even the appropriate company representative. Sometimes you’ll sit before the President of a company and discover
his wife or other partner is hands on or knows more about the operations than he does and you have to re-schedule. Other times
you’ll have people so unprepared that their not certain of the company structure (% of ownership besides himself) or
legalities and partnership disputes that eliminate funding eligibility or approval to seek funding or disclose any financial
information about the company. Basically, if you’re not prepared or you exclude key members of your
corporation you can ruin the momentum of your funding and even the chances to be selected.
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