Lack of capital is often the most critical challenge that every successful business owner may face in his/her tenure. Without diligent management of cash flow and a steady raise of more capital, the business can be constrained.
Capital Raising Challenges
- Insufficient working capital may make it difficult to attract investors and lenders
- A lack of working capital may jeopardize a company’s ability to finance its day-to-day operations
- A lack of working capital makes it difficult for a company to prepare for emergencies
- A lack of working capital hinders a company from expansion opportunities
- Without diligent cash flow management, profit in an operating cycle makes it difficult to fund working capital for the next operating cycle
Capital Raising Overview
Our firms helps entrepreneurs and small business owners determine their feasibility in the market, determine proper use of funds, and fund amounts. Since capital raising is a combination of banking and consultancy services, we provide financial consultancy to our clients to help run, expand and modernize their business. A financial engineer for your business, if you will. We help companies raise growth equity or debt capital from investors. We also help companies secure lines of credit from bank and non-bank lenders.
Two Approaches to Capital Raising
- Equity – Method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company.
- Debt – When a firm raises money for working capital or capital expenditures by selling debt instruments to individuals and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid.
Preparation for a Capital Raise
Preparing a business plan, an executive summary of the business plan and a presentation for investors.
Building your core team and assuring your investors your background and experience, as well as your vision for the company is relevant and meaningful.
Creating your team of advisors who are experienced in raising venture capital, whether they are Board member, attorneys, accountants, professional investors or industry executives.
Create a target list of investors using key criteria to include industry sector, investment stage, geographic proximity, amount to be raise, comparable or competitive portfolio companies and potential investor contacts.
Practice Your Pitch
Familiarize Yourself with Your Capitalization Table so you know who owns stock in the company; document options and stock issuances to avoid open-ended equity promises.
Types of Investors for Equity and Debt
- Small Business Investment Companies
- Venture Capital Firms
- Angel Investors
- Bank Lenders
- Non-bank, mezzanine lenders
- Foreign Investment Funds
How can The CEO’s Right Hand Assist You with a Capital Raise:
Our methodology for securing equity/debt financing includes the following components:
Interview Company Management
- Interview company management regarding the company’s vision, mission, capital structure (amount of money to be raised, valuation, share structure, etc.). This process allows us to effectively articulate and market the investment opportunity to investors.
- We develop or refine investor materials, including slide deck, executive summary, full business plan, and private placement memorandums (PPM), as appropriate.
- In this process, we highlight the company’s management team, competitive advantages, and value proposition. We develop a well-defined exit strategy and demonstrate the high potential for return on investment. As a result, we generate investor interest and encourage favorable investment terms.
Develop Investor Lists
- We develop comprehensive lists of qualified investors from our extensive network and proprietary informational databases. We invest significant time and energy to identify and assess unique, creative sources of equity investment, including strategic investors.