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Some Secrets to Raising Capital for your Business

Raising capital is one of the most critical activities in getting a business started, for obvious reasons.  It is one of the largest hurdles development stage and microcap companies have to overcome.  Raising capital through private investors is one of the best ways to get a young company off the ground.  Raising money this way provides your company with more exposure to your best customers.  Getting equity from family and friends has many advantages over other types of financing.  The course offered at  www.RaisingCapitalSecrets.com is one of the most comprehensive guides available for raising the capital you need to start a business or to grow an existing business the world of raising capital.

Small businesses are a major part of our economy, in fact one of the most important resources we have is the small entrepreneur. We need to keep this resource active as part of our economic growth.  To fund the business and keep a roof over one’s head, the entrepreneur must maximize assets, minimize expenses, and use credit judiciously.  By having a strong business plan, you will be able to effectively present your concept to potential angel investors, venture capital firms, banks for SBA Loans, or Business Loans.  They can provide your business extra working capital that can be used for marketing, purchasing of property, purchasing of another business, or for just about anything else for the growth of your business.  The investors want to see in depth information on how much money you need to run your business, and they also want to see how that money will be spent.

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Luckily, there are still options for funding new companies, but finding and securing the cash will take careful research, good negotiating skills, and, above all, an unflagging commitment to launching your new business.  When raising capital privately, your offering memorandum is the disclosure document you must present to communicate the benefits for your business model – and warn potential investors of the risks inherent in your business.  Small business lenders want to hear the good and the bad, the need to understand all the risks involved. Whether your business is struggling, or making money hand over fist, it’s important that both situations be communicated to a lender.  Find an Angel.  Angel investors will not only share their money; they’re also great sources of knowledge for fledgling businesses.  Keep it clean. Make sure your agreements are in writing and legally binding.  Cleaning up mistakes made in a securities offering is expensive, time consuming and can shut your business down.

One of the most important things to keep in mind: Raising capital takes more time than you think. Expect the capital raising process to take anywhere from a month to six months once your business plan is complete.  Even then, capital raising activities are likely to continue long after operations have started as you seek additional funding to expand your business.  It’s important not to waste your time (or theirs) pitching you business where there isn’t a good match to begin with.  You will likely pitch your business to many potential investors before all is said and done.  Private placement successes often involve businesses offering products that improve the environment, niche online communities, or a unique service concept.

We encourage you to read articles regarding raising capital and how best to do it.  To prepare yourself for raising capital, you should create documents that support each stage of the process.  Raising capital from family and friends has many advantages over other types of financing.  Raising Capital Secrets is the definitive guide for entrepreneurs and growing companies that need to raise capital, whether from friends and family, angel investors, or venture capitalists.  The course provides a huge selection of checklists, charts, sample forms to expedite the capital formation process, and the author relates eye-opening “”war stories”" and perspectives from the investor’s side of the table that will help you avoid pitfalls and guide your business confidently through every growth stage.  One word of advice, the duration of raising capital could last a few weeks, or it could last several months.  Finally, the last and most important rule of all is be tenacious, there is no substitute for absolute commitment to growing your company by raising capital.

To Get more information on how to raise capital visit www.raisingcapitalsecrets.com now and get your free report on the 1 sentence business plan.

The Berkeley China Initiative brings together the exceptional resources that UC Berkeley offers across the disciplines and professions to strengthen research and teaching about China, forge new international partnerships, and enrich public life by communicating those results. Sponsored by the University of California, Berkeley, and International & Area Studies. [events] [glopubaffairs] [bci] Credits: producer:UC Berkeley Educational Technology Services, sponsor:International & Area Studies, speaker:Daniel Scheinman – Cisco Systems

WHERE START-UP FRANCHISORS CAN FIND CAPITAL

There are three major investment groups that provide funding to small businesses including new franchisors. Each of these groups has certain unique features. Regardless of which investment group you intend to pursue be sure you have a well written business plan and executive summary. The financial projections must be realistic and sound. Finally, be sure to learn about these investment segments by attending workshops and networking groups, many of which are available for a nominal fee.

 

 

Angel Investors

 

An angel is a high net-worth individual who invests his or her own money in start-up companies in exchange for an equity share of the businesses. Angels typically invest between ,000 and 0,000 per transaction individually, and from 0,000 to 0,000 as a group. Angel investing represents a significantly large and growing portion of early stage capital available to startup companies.

 

Facts about Angels:

 

 

Usually receive a high equity value due to early stage investments
Due to risk, Angel investors usually seek returns of 10 times their original investment
Total investments in 2009 were US.6 billion, a decrease of 8.3% over 2008.
The total of Angel investments is larger than investments by private equity groups.
A total of 57,225 entrepreneurial ventures received angel funding in 2009, a 3.1% increase from 2008.
Post-seed/startup investing represented 62% of investments, an increase from 2008, indicating angels’ increased interests in the early and expansion stage.

 

    If you’re interested in pursuing Angel Investors be prepared to bring the following attributes:

 

They look for high-quality entrepreneurs with a track record of leadership and performance – either in the company’s specific industry or in prior entrepreneurial ventures.
Have a product or service that fulfills a need for a large market that will produce revenue.
The invested funds must be used to add value to the company not to instantly reward the owners or retire debt.
Have a competitive edge through a proprietary product or service. Investors will want to see entry barriers for your potential competitors.
Be able to demonstrate that your company can have substantial growth and increased profits.
Have a clearly articulated exit strategy

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Small Business Investment Companies

 

Created by Congress in 1958 the mission of the Small Business Investment Company (SBIC) program is to improve and stimulate the national economy and growth of small businesses by supplementing the flow of private equity capital and long term loan funds. This multibillion dollar, government-sponsored group of funds invests long term capital in privately owned and managed investment firms.

 

 

 

Facts about SBICs:

 

Administered by the Investment Division, US Small Business Administration
An institutional LP, managing .1 billion in outstanding leverage and commitments
An investor in 311 private equity partnerships
400 licensed SBICs in operation
Only, companies defined as “small” (net worth is .0 million or less) are eligible for SBIC financing
Most SBICs concentrate on a particular stage of investment (i.e. start-up, expansion or turnaround
361, or 24% of SBIC financings went to companies less than 2 years old
1,477 companies benefited from SBIC financing
SBIC financings totaled .8 billion

 

For those seeking to contact a SBIC and make a presentation for funding go to sba.gov where you can navigate to a directory of SBICs by State. Be prepared to follow the same attributes that are outlined above for Angels.

 

 

 

 

 

Business Incubators

These programs are designed to assist the development of companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Incubators vary in the way they deliver their services, in their organizational structure, and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a start-up company will stay in business for the long term. The BI can choose to serve select clients compared to SBDC that are required by law to offer business assistance to any company that contacts them for help. 

 

 

Facts about Business Incubators

Designed to accelerate the successful development of entrepreneurial companies
Chapters in most major cities
Entrepreneurs who wish to enter a business incubation program must apply for admission.
Help with business basics
Marketing assistance
Help with accounting/financial management
Access to bank loans, loan funds and guarantee programs
Access to angel investors or venture capital

 

To find a BI in your area go to the National Business Incubator Association at nbia.org. The site includes a directory of business incubators in the United States.

To summarize: For franchisors looking to obtain investment capital the preceding three groups focus on working with smaller companies. Take advantage of these resources and as a reminder be persistent and be willing to persevere. It can take from 6 months to a year to finally get you money.

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Do you Have Capital for Business?

As any entrepreneur surely knows, the first concern that comes up after deciding to go the route of self-employment is where to find the capital for business. Should you try to find angel investor networks, get a bank loan, or try for a start-up business grant? These are all very good questions that the people at Venture Funding Network understand well.

Angel investors networks are individual investors who put personal funds into your business venture. With angel investor networks, you will usually find retired people who want to stay connected to their previous line of work by mentoring a new generation of business people and providing advice on business management as well as providing your new business with valuable contacts. 

When you are starting a business, you may be surprised to learn that you must basically learn a new language. You don’t have to be flustered by this if you go to the venture capital glossary and learn what everything means.

When you become a member of Venture Funding Network, you have immediate access to angel investors networks, venture capital firms and more. Once your membership has been activated, you can post a profile which indicates the capital for business you are looking for, whether that is angel investor networks or another business revenue provider. When you are looking for capital for business, it is nice to know there is a website like Venture Funding Network that you can join for free.

Your membership with Venture Funding Network also gives you the opportunity to network with like-minded professionals on our active business forums. Talk to others in your field to see how they have fared with the angel investors networks found on our website, discuss future business ideas, or just hang out with your new virtual friends.

The Venture Funding Network creates a place where aspiring entrepreneurs can post listings in a searchable database to help them connect with the right small business investors. Small business investors can search the Venture Funding Network for outstanding business ideas that will help grow their investment capital. The network is a place that brings together capital, ideas, and people to unleash new innovative business ideas into the markets that need them.

For more information, tips, and resources you always can visit http://www.venturefundingnetwork.com/

 

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Financing Your Dream Business – How To Raise The Capital Needed (2)

One of the greatest challenges when starting a dream business is the raising capital needed for the business to hit the road. This is a great challenge to all entrepreneurs setting out because, they are incapable to acquire loans at the beginning stages. You cannot blame the banks much for two  principal reasons. First of all, the beginning stage of every business is usually an uncertain period laden with risk. Secondly, the entrepreneur at the beginning stage lacks the experience, the discipline and essentially, the financial perspicacity to profitably run and repay a loan at that stage.

As a beginning entrepreneur, it is important to overcome this hurdle and let your dream materialize. George Bernard Shaw once said, “The people who make it in this world are the people who get up and look for the circumstances they want and, if they cannot find them, make them.” Like George Shaw rightly said, it is the obligation of the entrepreneur to ascertain the options for raising capital to start his dream business and choose the best. There are some available capital sources. Most entrepreneurs coalesce two or more of them at beginning stage. In this article, I wish to tackle three of the sources of start-up capital, their merits and demerits

Venture Capital Fund.

This source of capital for starting a dream business is usually appropriate for entrepreneurs who have bright ideas of putting up innovative products and even have lucid models to show to all and sundry, but unfortunately, because they do not have the resources, assets and lack the experience required to start the business, banks are not ready and willing to give them loans. The venture capital fund is usually set up by the government, a group or an individual to finance new and mostly high-risk businesses.

Merits
1. It is totally dissimilar from the loan system and well thought-out to make right some of the short-comings identified with loans.

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2. The venture capital fund primarily caters for specific projects or stage of a venture at a time, making it specific in nature. Simply put, you get the exact fund for the exact project.

3. Not only do you get finances from this set-up, but also the venture capital system has the people with the requisite expertise to assist in running your firm, usually if you the visioneer lacks the practical know-how in running the business.

Demerits
1. Because of the high-risk associated with the nature of the projects they help finance, their probable profits or interests tend to be high. What do you expect?

2. Sometimes, the venture capitalists are resolute on the business, therefore put into practice decisions which tend to smoothen the progress of their early exit from the business they assist, which may not be in the interest of the business in the long round.

Leasing.

Are you starting a business and lack the necessary tools needed to set the business into motion, because those tools,machines or equipments are too expensive to acquire? Then this type is for you! Leasing is a loan system where loan facilities are fixed with the securing of an exact equipment or machine. Basically, there are two types of leases. The operating lease and the finance lease.

The operating lease is where the lessor – the leasing company owns the equipment or machine all through, and the equipment or machine goes back to the owner after the lessee completes the lease. However, with the finance lease, the lending firm owns the equipments with the user all through the lease period and after payment of an outstanding amount, the lending firm hands the equipment over to the lessee.

Merits

1. The entrepreneur does not need to fret over how to acquire all the expensive equipments required for the commencement of his business when capital is needed for other stuffs. This, sort of bring a major relief to the entrepreneur.

2. Also, in the event of the project not working out as expected, the entrepreneur can “walk out” and the equipment will go back to the owner who can decide to put it up for sale. As simple as A,B,C,D.

Demerit

1. The major disadvantage is that, the entrepreneur bears the greater part of the cost of repair should the equipment breaks down when in use by the lessee or when it is in the possession of the entrepreneur.

Equity investors.

In the world of business, there are an incalculable number of people who are more than willing, and looking around for businesses showing potential signs of massively doing well to invest in. If the entrepreneur, therefore, is able to come up with a project with high financial potential, he is able to draw such people to purchase equity or be a major shareholder in the company right from the on-set.

Merits
1. This system enables the business to grow speedily enabling the entrepreneur to dodge the stress and anxiety that comes with repayment of loans.

Demerits
1. The entrepreneur is robbed of his total or full control of his business.
2. There is usually too much interference by the equity-holders.

For more on how to finance your dream business with ease, please CLICK HERE.

Can’t Raise Capital

 

How come you can’t raise capital?

The thing is you still can’t raise capital. That is, you need to get a serious investor who has deep pockets and can invest large sums of money in your venture.

Still Can’t Raise Capital

How do you get a venture capitalist to invest in your venture? Well, that does take quite a bit of work on your part to prepare a sound business plan with all the proper market analysis to win the investor over. No more will you say I can’t raise capital.  For this, you need to spend some of the “sweat equity” that you accumulated to get the right professionals who can provide the correct numbers and the realistic estimates that investors will be willing to look at. Then you need to sway these investors in your favor. So you don’t say I can’t raise capital.

You will see why most people say I can’t raise capital. Think about forming a sales pitch for your company. As mentioned before, while earning your sweat equity in a marketing job, now use those skills to form your financing pitch. Your financing pitch should be both written and oral. The written version should be your teaser email and your executive summary; the oral version should be a carefully honed elevator pitch. Of course, building a good rapport with the prospective investor is also crucial. Remember, when you want funding from a venture capitalist, you are selling him some of the equity in your company. Plus, I mentioned before that venture capitalists have deep pockets, so here’s why that is. Unlike the angel investor who invested in your venture or your friends and family who have a limited amount of money they can give, venture capitalists have access to large funds that can reach over a billion dollars to invest. Why is this? Simple. Angel investors invest their own money in your venture and they budget a certain amount for their investments and budget other sums for other expenses. A venture capitalist, on the other hand, works for a venture capital firm, which usually manages a fund. This means that a venture capitalist has a huge weight on his shoulders because he is not investing his own money. He has to answer to the vc firm that employs him for the investments he makes. Usually the funds that a venture capitalist makes investments from is either endowments, pension funds, or the private funds of wealthy families. The owners of the funds entrust the venture capitalists to make wise investments that allow the funds to grow.

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What is a venture capitalist interested in when he wants to make an investment in your venture? The most important thing to a venture capitalist is the ROI or return of investment. One thing you need to know about investors in general is that, firstly they are opportunists and secondly, they are risk takers. Every investment is an opportunity to yield a high ROI, but it’s also a risk. The point is that although investors take risks, they are not random risks. The risks are calculated and are only taken after the due diligence has been done on the venture. If an investor feels that your venture has too low of ROI and a very high risk, he will be less likely to invest. On the other hand, if the ROI is high and the risk is low, you will more than likely get funded. You need to prove to the investor that your venture is the best opportunity for him and that it is well worth his investment. You need to make sure that you are prepared for the due diligence process, which can be rather nerve wrecking. A venture capitalist rarely makes decisions on his own. He has all the experts needed, such as market analysts and will study every aspect of your venture to determine whether it will provide enough ROI to be worth his investment. You will be asked a series of tough questions by both the investor and his partners. Furthermore, a venture capitalist will not just want his share in the company equity either. In most cases, a venture capitalist will want a controlling position in the company, most commonly a seat on your board of directors. The board of directors is the governing body of your company and should be evenly divided with investors and company executives. Don’t give up and you will raise capital instead of saying I can’t raise capital.

Having the venture capitalist sitting on your board of directors is not all bad. In fact, it can benefit your company. Because a venture capitalist has such deep pockets, he has resources that can benefit your company and improve your business. This means that you can get the edge needed to join the big boys. You can do it! You just need to work for it and eventually you will come up with the right strategy. No longer will you say I can’t raise capital.

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Financial Advisors ? Their Importance in Finding Capital Investors and Using Term Sheets (Part 3 of 3)

When you raise money for your company as an entrepreneur or capital seeker, you are going to find that there are many legal and financial vehicles that can be employed that will balance the needs of the individual and mutual concerns.

In this part we’re going to discuss the mutual needs. And again you should have retained a good securities attorney at this stage and additionally this is a part where you’re going to need a good solid CPA or accountant to get guidance on what suits your needs best as well as the mutual needs.

We can offer some more ideas here as well with regard to the mutual needs.  This part you’re going to have some help because the investor is working with you be it private equity, a venture capital firm or an angel investor.

We are going to be looking at both parties coming out with the best possible scenario here, so one of the things is retention of the key management. You’ve got to consider this very carefully. What does your management structure look like now? Are you looking for key people?

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A lot of times you’re going to find that the capital provider is in a position to provide resources in the form of management for you through their experience in dealing with many, many companies.

Another thing is the composition of the board of directors. Ultimately you’re probably going to see a representative of your capital source on your board of directors and I would welcome that, there’s some valuable insights that you’re going to be able to get from that.

Another thing is governance documents. When you get into this stage and you’re at a term sheet, you’re going to be establishing some guidelines that may be a little bit more than what you started out with previous to the funding. This provides a forum for making decisions, changing things that may have been established, and resolving any conflicts between the investor’s wishes or needs or wants and yours. So this is one that you want to take very slowly and carefully.

Now another item that is a mutual need in the term sheet would deal with the health of the post funded company. In other words after the funds are in there should be mutually agreed upon uses of proceeds and governance documents are put into place to look at expenditures, investments, ratios.

The investor is going to want to check up and see that those funds are being put to use in the places that were agreed to mutually. Additionally some of the items under that would be things like the tax consequences of the investments that are being made and the expenditures that are being made. For example, expenditures on payroll have ultimately some tax consequences, whereas expenditures in other areas may have some tax benefits.