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Tag Archive for: Raising Capital

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Raising Capital and Talking “Risk”: 6 Tips on Talking to Investors

A new company seeking funding from investors won’t get very far without the perfect pitch. A pitch must include the cold hard facts of your business and how the investor funds will be usefully allocated, but it also requires personality and points of intrigue. When deciding to begin raising capital consider this, venture capital firms have invested over $4 billion dollars in over 1,000 start ups in 2012; similarly, angel investors invested over $20 billion to start ups. These figures show venture capital firms are willing to invest and you have a chance to gain the much needed cash for your new venture.

Here are six tips for talking to investors on raising capital:

  • No cold calls. Use your networking skills. Get the word out about your business by attending conferences, using social media, etc. Most investors are more apt to lend to those who are introduced to them by a trusted source or credible referral.
  • Talk about market need for your business idea, not market size. A large market for your idea or product does not guarantee your product or service will meet success. A pitch directed toward the idea of getting a slice of the pie is not sufficient enough to engage an investor. An investor wants to see the uniqueness of a product or service, also a long term growth goal oriented mindset for success. You should have a deep familiarity with current trends, market dynamics, buying behavior, and buyer motivation, especially in a situation in which your product or service is entering a huge market.
  • Acknowledge your competitors. Investors like to see you have competition for your product or service. This shows investors your idea is marketable. Since you will not have solid evidence or reports that show your particular business growth yet, it is important for investors to be able to compare your competitors growth and realize your potential.
  • Pinpoint where your investors fit in your business plan. Lay out where the investor’s funds will be applied for your start up. Have reports or breakdowns displaying what you need and how much you need to really get your business going.
  • Practice makes perfect. We are all not born pitch producers. It takes time and practice to perfect your pitch. You want your proposal to be quick, to the point, and precise, but also include a little heart. Making a pitch a bit personal is not a sin, in fact it is engaging and helps the investor know where you are coming from. Remember, they were in your position at one time.
  • Lastly, talk to them about your organizational risks. Risk management is more visible than ever. Let them know that your organization has identified the critical risks it is exposed to and share your controls for managing those risks.

Venture capitalist investment can help you realize your dreams and get your budding company off the ground. Through the TechAssure Association member, there are here to help protect innovative firms. Just because your firm may be taking a risk on a new business, doesn’t mean you can’t be protected, please contact a TechAssure member for more information on how to keep your investment safe.

 

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Raising Capital and Risk Management: How to Secure Financing for Your Company’s Mid and Long Term Needs

A company may need to raise capital for a number of different reasons depending on short term and long term goals. After initial start up, raising capital becomes a priority for the median and long term financial needs of a firm.

Before you make your plans to raise additional capital. Consider what questions the board will ask about “risk”. Board members and investors of high-growth firms are interested in knowing if your risks are greater than they were 12-24 months ago and if there is any unforeseen event that could help your firm leap over your competition. There are a number of options available for additional rounds in financing. Which ever option you choose, make sure to include points about your risk management plan.

Issue of shares

This is the most vital method of raising mid to long term capital. The liability of stake and share holders is limited to the share’s face value; they are also very easily transferred. While a private company cannot invite the public to invest in their share capital, public limited companies can take advantage of this type of public trading. There are two types of shares:

  • Equity Shares: The rate of dividend of these shares is reliant on the profits available and the discretion of the board. There is no fixed burden on these shares and each share carries one vote.
  • Preference Shares: Dividend is payable on these types of shares at a fixed, steady rate. Again, there is no fixed burden on the company’s finances and these shares do not surrender their voting rights.

Issue of Debentures

These are loans which can be secured by a financial institution. These loans are granted maximum time period and are held against future projects and business endeavors. Loans of this type are guaranteed against company property, gold, and/or assignment of stocks and shares.

Loans from Commercial Banks

These loans are granted by commercial banks against the security of property and assets. There is no legal formality to these types of loans, except that of creating a mortgage on company assets.

Public Deposits

This is a strategy which involves inviting shareholders, employees, and the general public to deposit savings into with the company. The advantages include:

  • The rate of interest on these loans is less than that of a bank loan.
  • During a credit squeeze, these loans are easier to secure than bank loans.
  • Credit-worthiness is not an issue on these loans.

There are options available for mid and long term capital needs. If you have a track record of understanding your risks and managing the upside, you will have more options for growth. We invite you to contact us for more information about TechAssure Association and the opportunity to work with one of our members.

 

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Building a Vast and Bright Future: Tips on Raising Capital for Your Business

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Raising capital for your new venture is no small task. With perseverance and a strong business plan it is possible in today’s economy for entrepreneur to raise the funds needed for start up. Here are some tips on how to get the investments you need to be a competitor in today’s market.

  1. Have a clear vision of what you want for your business and your possible expenses now and for the future. There are two ways to tackle your business venture idea; high impact or small business entrepreneur. If you have grand visions such as becoming the next Apple or Yahoo, your startup capital needs will be different than someone who owns a corner store in town. With a high impact business, an individual is in a position of vast growth and wealth procured not only for himself but long term investors. As a small business owner, an individual plans to stick with his trade, wants salary security, and a location he or she can stay in for the long haul. Before raising capital, one must decide which route he or she will take
  2. Do your homework. Research is your best tool for raising capital for your new venture. The internet can help you seek out potential investors as well as finding out what types of funding you may qualify for. Offline you can become involved with local entrepreneurs. Conferences and workshops in your area can offer a wealth of information on how to secure funding.
  3. Identify what type of investment capital is best for you. Whether it be through bank financing, grants, or help from family and friends, it is important to know your options.
  • Equity financing usually involves investment from an angel investor or a venture capitalist. These investors provide excellent startup capital; usually expecting some type of yield on their investment in the form of acquisition, stock buyback options, and IPOs.
  • Taking out a business loan or “debt financing” is another option for raising capital. These are usually in the form of a secured or unsecured loan from a bank or financial institution.
  • Family and friends can sometimes lend money to a business for startup.
  • Government funding or SBA grants may be available to your company. Since 1953 the Small Business Administration or SBA has been a resourceful means for business owners seeking funding for their company. The SBA has granted over 220,000 businesses funds equaling over $45 billion dollars over the years. An SBA grant can be an excellent opportunity for the new business owner to secure the funds they need for startup.

The members of TechAssure are dedicated to helping your firm manage risks as your business goes through the various phase of raising capital. It’s important to have the members of TechAssure on your side as your company grows. For more information on how to stay protected, please contact us.