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Introduction to capital raising

By CCIWA Editor

Looking to build, expand, redevelop, put more money into marketing, research and development or hiring more experienced staff?  

But you if don’t want to take on more debt or borrow from the usual sources, this is when you look at raising capital.   

You need to start this process 6-12 months before you want the money and you need to think about what the returns to the investor will be. How will it be a win/win situation?  

Work out your business model to make the profits.  

Venture capitalist and industry mentor Matt Macfarlane of m15e ventures, says the investor is investing as much in you as they are in the business idea.  

If you are well prepared and take the right steps, you are more likely to be successful in raising the capital that you need.  

Here’s six tips to get you on our way:  

1. Who will you target? 

Identify people who are already interested in your industry. In Macfarlane’s experience people are more likely to invest in something they understand. 

“For example, if you’re building a mining technology company, go to mining executives. If you’re growing an education technology company, go to the people who have made money out of education in the past,” he says.  

Also, you’ll often do better if you can target people you already know. 

2. Research, research, research 

Once you have identified the people you will target, extensively research them. Find out:  

  • What are their passions, interests?  
  • Failures, successes? 
  • Goals?  
  • What have they done in the past?  
  • What approaches have worked before? Why?  
  • What can you find in your project that will resonate with their past decisions and interests? 
  • Who do you both know that can give you a warm introduction?  

Armed with that knowledge, prepare your path.   

3. A team approach 

A company should present as a team rather than as an individual. The most robust investment targets tend to have depth in management.  

You want to minimise the “key person risk”, or what Macfarlane calls the “bus count; which means how many people in the company can be hit by a bus before the company needs to shut down”.  

4. Have an A-team 

The optimal arrangement is to have at least two founders; one who is highly technical and one who is highly knowledgeable in the industry segment that the technical solution is being built for.  

Macfarlane says it is not often that you will get both of those things in one person.  

5. Persist and persist 

Almost every overnight success story takes many years and many tries. Be prepared for lots of knockbacks but remind yourself that each knockback is closer to a yes.  

You only need one yes to begin raising capital. The time it takes to raise money can be a big distraction for founders and business owners. Don’t let rejections abandon your efforts.    

6. Relationships are key 

Work on your relationship with your potential investor. Most investors don’t like to deal through advisors and prefer to deal directly with the person they are investing in.  

So, while an advisor may help you to prepare your case, it’s best not to rely on the advisor to go out and directly raise the money.  

Looking to build, expand, redevelop, put more money into marketing, research and development or hiring more experienced staff?  

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