When raising capital, it is often difficult to do so without having good connections. Oftentimes, startups are unable to get funding from angel investors or venture capitalists who invest heavily in the company because they lack the professional network that would allow them to make contact with investors. When raising capital, one must consider all of their options thoroughly before deciding which route produces the best results for the company.
Catalyst Group is a group of individuals who work by pooling money together and investing in private companies through loans or equity (stock). Typically, these investments aren’t publicly traded on stock markets unless there is normalized demand among other shareholders. An angel group can consist of an individual person or multiple people working together if there is a common interest. It’s important when raising capital to do research on what groups are available in the area and if they’re compatible with the projects that you would like funded.
Raising capital for growth is not as hard as you think it is. There are six areas that are critical to raising capital successfully.
1. Have a business plan completed. Many people believe that raising capital has nothing to do with the business plan, but the reality is that raising any type of capital without a plan is very difficult and will cost more money in the long run. The truth is raising capital revolves around your business plan, so please have one completed before embarking on this task!
2. Remove all debt from your balance sheet besides equipment financing if it’s necessary to conduct the day-to-day operations of your business.
3. Make sure there are no pending lawsuits or unresolved disputes with vendors or customers. This can be very bad for raising capital.
4. Be prepared to state the amount of money you need and how you will use it. The more detail, the better chance of raising capital successfully!
5. Have a reasonable valuation for your company that’s supported by data… not just an opinion that is subject to interpretation by others who may have ulterior motives (like raising their own valuation).
6. Have all your financials in order; balance sheet, income statement, cash flow statements, etc…
If you follow these basic steps before raising any type of capital, it will help ensure success thus minimizing additional expenses and maximizing time spent raising funds.
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