Raising fresh equity.
I need more equity to grow my business – how do I attract it?
Be clear about what the money is for
Identify the purpose and benefits of the required investment.
Be specific about how the new money will be used.
Quantify the potential of the opportunities for the business.
Provide forecasts to cover at least the next three years with clear objectives and strategies.
Ensure that your forecasts are based on realistic assumptions.
Show where you are now
Prepare a business plan explaining the historical growth of the business, its operations, key competitors and main clients.
Identify the strengths and weaknesses of the business and provide solutions as to how any weaknesses will be addressed.
Assess whether your management team is credible and whether you need to make changes or further hires.
Be clear about why investors should be interested and what is unique about your offering.
Highlight any risk factors for the business and how you will manage them.
Identify how the investors will be rewarded
Decide how much equity you are prepared to give away.
Minimise dilution by creating competitive tension, where possible.
Consider the use of loans and ratchets.
Identify where the investors’ exit will come from.
Seek professional advice on the terms and conditions of any potential investment.
Carefully research your target investors
Research the market and approach only relevant investors. Don’t try to put a square peg in a round hole.
Understand what else they have done in your sector.
Ensure that your first approach is focused and clear in order to move the process forward to a meeting.
Be prepared for investors to carry out detailed due diligence on your business.
Do due diligence on your preferred investors by speaking to their other investees.