How To Overcome The Catch-22 Of Raising Capital
View PDF | Print View
by: tiber21
Raising capital is one of the most vexing activities for possibly any company to pursue, either a start-up or a well-established ongoing business enterprise. Newer private companies, particularly, experience the hardest time obtaining good sources of capital formation. The limited business lifespan of the new startup company, coupled with a shallow or very short track record, conspires -- via perfect, but skewered, logic -- to bring forth this unpalatable outcome: The young private company finds it hard to develop new products, manage growth, and pursue market dominance – to establish a better track record – on account that it can't connect to dependable ways to raise capital, and it can’t obtain access to capital sources because of its limited performance record!
The preceding inspires us to ask this question: In what way can a private or public corporation wrangle free from those limitations, and receive the money that will allow the corporation to take the next step in its business life? The corporate financing limitations previously expounded in the beginning paragraph are not new to company founders, corporate directors, and other company officers; all of them have confronted the – seemingly impossible -- task and overcame its limitations to corporate growth. Your business enterprise can get the same results! Proceeding is a general roadmap for raising capital:
(a) Register on business forums, local business associations, business tutoring clubs, retired executive workshops, and business blogs. Seek the advice and tutoring of the older, more experienced CEO or CFO.
This is such a golden opportunity, because these retired business executives have a wealth of experience to share with struggling, up-and-coming entrepreneurs; “they’ve been there, done that!” Furthermore, though these experienced executives are no longer involved with the management of their old companies, they miss the “fire in the belly” of their old business activity, and in a vicarious fashion, they get to relive their youth, and that is why they are eager and glad to help, and like to keep a "finger in the pot."
(b) I bet you were thinking of a business plan, weren’t you? You need to prepare a well written and professional business plan, since it is one of the most essential tools employed to raise capital. Few things are more essential for your company’s ability to land investment capital than making available a thoroughly researched and meaningful business plan. The presentation should communicate your strategic corporate planning, your company growth philosophy, and your general business know-how.
Yet and still, the most important and significant feature of any business plan is to appraise the proposed target – the funding source that may take action upon it – how your business plan's to use the capital. What are the steps your business is going to take to use the newly-acquired capital? Revise and update your business plan as needed to reflect new information or changing business reality, as well. It should come as no surprise that a competent and resourcefully produced business plan will greatly improve your company’s chances of raising capital.
(c) Do a painstaking inquiry regarding the capital formation source your corporation intends to engage. The proposed sources of your campaign to get investment capital consisting of: venture capitalist (VC), angel investors, securities broker/dealers, investment advisor firms (IA), sophisticated investors, accredited investors, and investment banks, should receive a careful look-over. The gist of the deal is to confirm if they specialize in your particular line of business. Make a point to investigate their most recent capital funding endeavor and see if they have provided financial resources to comparable businesses in your segment of the market. There is a very strong chance they would look favorably to assist in helping your corporation raise capital, as well.
(d) Other avenues to explore, while your company seeks to raise capital, is business confirmation regarding your corporate composition, product, and feasibility studies. Technologically advanced start up companies, to name a few, could be bringing to market items and innovations that are ahead-of-the-curve, light years away from presently used systems.
On account that nobody has ever seen – or even contemplated the possibility of the idea – there could be a lingering hesitation coming from the directors at investment banks, broker/dealers, and corporate financial planners. Professional and technical verification of your company and product can prove invaluable when seeking to present your business and goods to the group that matters the most: your future corporate capital sourcing!
(e) Last, but not least; the magic that makes raising capital, and corporate growth and expansion possible: don’t ever give up! When a door is shut, simply think of it as a necessary step, one that will only get you that much closer to your true goal: the open door that invites your corporation to enter, and will be influential in helping your company in raising capital, and to land corporate funding.
(f) Every capital funding proposal should beckon earnest deliberation prior to reaching for the next deal. If you follow this broad -- yet specific -- outline, your company will hit the ground running and conquer the market through the tradition of raising capital.
About the Author
Frank A. Roberson is a business development and capital funding writer and an expert in helping corporations to raise the capitalization needed for business concerns to prosper and grow. To read more of Mr. Roberson’s articles on raising capital, and to see how your business enterprise can fast track its growth and development, please visit => raise capital
Rating: Not yet rated
Login to vote