Funding: How to avoid kissing too many frogs
There’s more money than ever before for SMEs with growth potential but finding the right investor means kissing a few frogs. Believe me, you really don’t want to kiss more than a few.
Great entrepreneurs know that avoiding the frogs requires research and discipline. Inexperienced fund raisers may find the right investor but risk missing the most appropriate, or worse, accept an offer that could damage the business!
There may be eager investors and lots of money available but the journey is far from easy. Many fall at the first hurdle; even proposals with good potential. Multiple rejections can be avoided; success within your grasp; the reward spawning success.
Of course, a good business model is required; an achievable plan; projections with sound and validated assumptions; credible and committed management; intellectual property or other barriers to protect the business; potential returns that meet the investors requirements.
We speak with many businesses but few entrepreneurs properly due diligence potential investors. Do you meet the investment criteria? Don’t blame the frog if you don’t. Do they invest in your stage of business? Understand your sector? How deep are their pockets? What’s their track record – they need to know yours!
Proper preparation is the key to getting through the door.
Proper preparation is the key to getting through the door. If you need proof, conversations with investors suggest that only 1% to 5% of applicants receive funding. Conversely, over 60% of companies applying for funding received offers after completing the Lancashire Investment Readiness programme.
Investor selection is a critical part of the fund raising process. Researching and understanding potential investors may seem inconsequential. Ignore it at your peril.
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