Definitely not when they’ve run out of cash!! Going to investors at too late a stage is a risky strategy. Better is to look at the long term objectives and aspirations of the business and plan the fundraising sensibly into this long term strategy. In terms of order, many entrepreneurs try friends and family first, then angels, and then VCs… not forgetting of course any grants or soft loans accessible on the way. Also – don’t underestimate the time it takes to secure funding. This can be anything between a couple of months and up to nine months, or sometimes even a year.
When an entrepreneur wants to raise finance, what should she prepare?
A business plan with a robust, efficient executive summary and well-considered financials, and a well formed pitch – which should be deliverable either in the form of a brief summary (elevator pitch), or in
terms of a detailed presentation outlining the full commercial opportunity the business presents.
What are the most important 3 things she should mention in her pitch?
That you are (1) targeting a growing market with a need for your product or service, (2) that the team is talented and able to execute the business plan, and (3) that your product, service or idea is groundbreaking.
And what is less important for raising finance?
You have to be prepared for everything – no part of the business is too small. But when you first pitch it, don’t fall into the trap of talking only about how great the technology or idea is – what investors really want to hear about is how it is going to make money.
What kind of financing is available for entrepreneurs?
- grants, soft loans
- friends, family
- angel investors, seed investors
- VC capital
- VC debt
Is there a difference in raising finance for women companies?
A report by Library House stated that female led companies funded by VC’s performed better than male led companies. However, in 6 years in this space, less that 5% of the companies I have worked with have been led by women.
(to be continued in part 2)