Raising Capital for Business

You have a great concept and you have done all the ground work to create a great business opportunity.  It must feel great to accomplish so much thus far!  This obviously requires a lot of capital to get the business off the ground and start generating revenues.  Once a viable business is created, raising initial capital or funding may be required to further expand and grow the business.  At this point, it would be time to pick up the phone and make some calls to the right investors.

You may think that approaching a bank for a loan may be the easiest solution.  But most banks would be reluctant to provide financing to start ups.  They like to see a track record before any funding is provided and review historical information such as financial statements and credit history.  For most start ups, providing this information would not be possible.

Before making your pitch to investors who can provide funding involves reaching out to the RIGHT individuals.  If you are in the tech space, reaching out the individuals connected in "silicon valley" of your city would be a good staring point. Therefore, you need to understand your space and who are the some of the players.  Once you do your research and find the right people, pick up the phone and make the calls.  Networking and making the introductions will help you get your foot in the door.

Also, before you reach out to potential investors, having a viable business plan is a great starting point.  Ensure that you have the important details on your product, financial data, cash flow projections, prospectus, what has been accomplished to date (more than just the idea!), etc.  You should approach investors once you have picked up some traction and have done a fair amount of work to prove you have a viable business. However, the business plan alone cannot be the only selling point for anyone to invest in your business.  You need to ensure that the investor can trust you to grow the business and have a viable business plan.

Remember, if an investor is going to provide you with some financing, they will want something in return!  Most likely partial ownership of your business.  They will also do a lot of work and their due diligence, audit you financial data before they offer you any money also.  That's just the nature of the beast.  You need to assess whether you think you need this financing to take your business to the next level and increase overall profits that will benefit you in the end.

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