Continuation from yesterday…...(Why Russian Billionaires Beg On The Streets Of Moscow)
Finally and before we look at all of the above, it goes without saying that you need to be at the top of your game when it comes to raising capital. That means that your pitch and your documentation should be polished to perfection before approaching a single investor. Well, assuming that you would like to be successful in your capital raising attempt. For instance, as an investor I require as much information as possible to make an informed decision about an underlying deal. I am interested in seeing if the overall business makes sense, what kind of a traction is there, the numbers, if the business fits my investment profile/style, etc…. If someone cannot offer me at least that much information, they don’t deserve my time nor my money.
In other words, if you cannot put a pitch together highlighting your business idea while asking for capital, how can you run a company? You cannot. As such, if you are to remember anything out of this capital raising section, remember this. If you are to approach your capital raising process in an unprofessional or unprepared matter, you are about as good as dead in the water. I guarantee you one thing, your efforts will fail and you will not be able to raise any money. As a result, you should spend a considerable amount of time on getting your “ASK” ready before approaching a single potential investor.
Now and without further delay, let’s jump in and explore some of the ways of raising capital for your new venture.
Self Financing:
This is by far one of my favorite options. And it should be yours as well for the following reasons…
- You don’t have to beg anyone for money. This is self explanatory. If you put your own money in, you avoid the pain, suffering and embarrassment associated with asking people for money.
- Most importantly, you retain the most valuable thing you have going for you. The only thing that will make you obscenely rich if you are to succeed. EQUITY. The formula is very simple. The longer you can stay away from raising outside capital the richer you will be.
- You retain full control of the decision making process and the direction of your enterprise.
- It shows future investors that you have skin in the game.
- It makes you work harder and smarter.
Overall, this is the best option you have available and I highly recommend it if you have access to your own capital or savings. Not to mention, it will allow you to get going much faster as a typical money raising process can take quite a while to materialize. Three to six months, sometimes even longer. So, if you do have a great idea, an infusion of your own capital might be all you need to get things moving in the right direction.
There are also two subsets to Self Financing that you should be aware of. Do not discount them. They can be extremely powerful tools in helping you get your business off the ground. And while there are many names, I tend to call them “Beggar Thy Neighbor” and “Revenue Financing”.
To Be Continued Tomorrow…...(Why Am I Seeing This On A Financial Website?)
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