The truth about raising growth capital is that you’re likely to spend more time preparing to pitch possible investors than you are in actually making the case for your business. That’s because capital investors want to know who they’re doing business with, and that means you must be ready to supply all the information they want so they can decide whether you’re a good bet to invest in.
First, you should make the vetting process as smooth as possible, so gather all your records, including cash flow statements and your balance sheet, and making sure they’re available. However, investors will also want third party verification of your operations. This means you’ll have to ask an accounting firm to look at your books. Large firms that investors are comfortable with are your best bet, but if it’s too costly to go to the larger firms, try a medium sized firm instead. Make sure the firm is easily validated by your possible investors, though.
A ship captain doesn’t set off on the high seas without a navigation plan. Similarly, you shouldn’t plunge into business without knowing how much you can realistically make and whether your products and services will sell. You’ll need to prepare an extensive plan that documents your cash flow, your income and your balance sheet. A good way to persuade financiers to invest growth capital into your company is to make sure you’re not incurring too much debt. A balance sheet with little debt will tell prospective lenders that your cash flow won’t be tied up in debt service. Finally, a plan documents milestones that your business can reach and build upon.
While you may have your documents in order, that won’t mean much if you take them to the wrong lender. Some lenders don’t work with businesses that lack a long operating history. In addition, some lenders of growth capital may not be flexible with their terms. To make sure you come out of any financing agreement in solid shape, look for partners that understand and are experienced in your business, have fair pricing and terms, and are also flexible in their arrangements. Finally, make sure the personality of your enterprise suits your financial partner. You’ll want a firm or a lender that you can work smoothly with.
Partnering with financial investors of growth capital is built on a foundation of judging an enterprise thoroughly and carefully. Your prospective partners will want a complete examination of your operation, so make sure you do a thorough job in turn making your case to them, and you’ll come out with a profitable business arrangement.