Why do good businesses fail at the capital raising stage?

Posted by Elite Internet Technologies on October 24th, 2016

If you follow startups and private capital investment, you will have noticed that many businesses don’t make the cut when it comes to raising capital. There are many reasons for this, but some of the reasons are very avoidable.

Let’s clarify – Capital raising and management is a science. It is also real business, managing real investment capital.

A theoretical case study:

Business A needs to raise capital. They get a One Size Fits All capital management scheme in place, and discover that investors aren’t impressed. No good business person mindlessly accepts information. In this case, the investors aren’t impressed with the business model, cash flow, and forward planning. They are considerably less impressed with the forward projections with no credible evidence attached. Even the Regulation D memorandum preparation (an absolute basic) looks like a wannabe laundry list.

To them, the One Size Fits All approach looks unprofessional, slipshod and unconvincing. That’s because it is. The problem for Business A is that the investors are right. The business doesn’t raise the capital, and is stuck in first gear.

Business B does raise capital. They do a tailored approach to the Regulation D offering preparation. They provide a detailed, properly laid out business plan, with full capital management and forward planning information built in. Their business model is impeccable. Investors are convinced, and the information is backed up with hard business data. They invest on a clear basis.

If this seems like a no-brainer, it happens all the time. Entrepreneurs are great with business ideas, products and promotions, but don’t necessarily have a clue about this capital raising process. The successful entrepreneurs get professional guidance from proven experts in the field.

If you’re somehow getting the impression that getting things right is the minimum requirement for raising capital and that you need expert help, mission accomplished. A good example of a company which helps start-ups and capital raising is a company called Venture Associates. This is a long established company with a staggeringly long list of successful capital raisings.

Check out their website here at www.venturea.com , and above all, see the information regarding Regulation D Memorandum preparation. This site is a virtual one stop shop for core information about capital raising and expansion management. You can contact them directly online or by phone.

Fore more visii: www.venturea.com