How to generate capital
- Do not underestimate the time it takes for the capital-raising process – think hundreds of work hours.
- Expect an INTENSE level of scrutiny.
- Have your finances and legal affairs in perfect order.
- Have a succinct, realistic business plan ready and ensure someone in your team can present it brilliantly.
- Be able to answer the questions: ‘How much money do you need?’ and ‘Why?’ (Sounds easy? Try it.)
- Choose your investment banker or adviser wisely. Rigorous reference checks are in order to ensure they have a good track record. There are lots of dodgy, expensive capital raisers out there.
- Write up (with or without the help of lawyers/VCs) a detailed information memorandum for potential investors.
- Don’t oversell the business. A wildly ambitious forecast with poor research can turn off an investor instantly.
- Always opt for introductions to prospective investors rather than cold-calling.
- Do your due diligence on prospective investors and make sure they have the right cultural fit with your business.
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