Thinking of raising capital? Make sure you consider these 6 things before you do (Part 1)

February 21, 2019

In this blog, I want to continue the six essential areas to review before you start your capital raising. The difference between getting this right before you raise capital could mean a huge difference in terms of how much you raise.

Firstly, to recap the last three points that I covered in Part 1, I shared that you must consider the areas of your sales, branding and staffing. Forecasted sales and the ability to distinguish between sticky and once-off revenue will be important.  Secondly, branding matters in order to differentiate your self. Lastly, getting the right staff to execute on the plan is of paramount importance. These will be core to iron out as you begin your pitch deck.

In this blog, I will cover the last six points to help you complete the capital raising mission:

4.      Operations

In the entrepreneurial world, operations is not a sexy word however, it is extremely important that investors can see and believe that your business runs well. This means that they understand who runs the day-to-day operations, there are clear lines of roles and responsibilities and that there is team unity. Often in the start-up phase, these things are overlooked, as you are typically working hard running projects and implementing new ideas. However, it pays to bed down how you operate, your roles and responsibilities, and operational oversights to ensure that investors have comfort that it will be a well-run business.

5.      Process and procedures

Another overlooked area of consideration in the capital raising phase is the process and procedures of the company. Many people look at the “idea” or the “new” shiny products that occur in the start-up world and overlook the core engines that make it work. The growth mustbe sustainable the fore the right technology, platforms and processes are in place to ensure effective growth and maximize efficiency. While investors may somewhat forgive the lack of process in the start-up phase if you have these bedded down and clear it will go a long way to help convince the investors to place their trust in you.

6.      Financial  

The basis of the financial evaluation of the business will effectively decide how much you will raise, however, without taking the above in consideration, it will inevitably show in the numbers. For instance, if you don't have sticky sales, then your business will show volatility in the numbers. If you don’t have a good team, it will effectively show in the numbers through sales or increase salary expenses due to high staff turnover. All the above is essential to have good financials that will eventually lead to a higher evaluation and therefore a high capital raising. The financials are essential and the bases of the financials are all in the above points.

With all this in mind, I hope this will help level up your business and help your start-up. I trust that this blog helps you and if you are keen to level up your business and be part of our Phamily at MGA, feel free to contact me and we’ll get your mission to grow your business started