Fundraising is a complex and sometimes crucial operation for companies to exist. She doesn’t improve! Too many entrepreneurs initiate fundraising requests without knowing the ins and outs of this type of approach. Here are a few things that can help you prepare well and maximize your chances of success.
Preparation: A Base
It is not uncommon to meet business leaders wishing to initiate a fundraising request with two main motivations:
- responding to a development project
- Solving cash flow problems.
Of course, it’s a question of having answers to four basic questions: What is your project? What do you want to fund? For what amount? How much is your investment in this project?
The work doesn’t stop there at all because you must know how to answer other questions that pertain to your investors in general and their capital outflows in particular. It should be understood that most of them are not intended to live within your framework and live on the profits of the company. In most cases, they would like to exit one day, which often happens when a company buys its shares or when an investment fund arrives. So they should be aware of a certain capability of the company or a particular interest in what you do for certain companies.
key to good preparation
It is still useful to introduce the topic and shed light on the necessary prerequisites for the implementation of the fundraising approach. To be effective, you have to be efficient, so it is the manager’s ability to make the right investments on the project, make an early diagnosis, and give the fundraising program every chance.
This should be preceded by any request for assistance, subsidies, competition or entry to capital, which usually results in the appearance of a business plan that would make it possible to highlight the activity, the organization of the company, its modes of operation. To obtain the necessary necessities and resources. You must be confident of your proper use of funds, your financial capability and your good management of the company. This job can be entrusted to an expert in financial optimization, who will guarantee you all the objectivity of his analysis but may have a cost.
What is this diagnosis called “Due Diligence” made on?
It is based on current but future activity through the following:
- Provisional budget for the financial year in respect of commitments made
- Profitability of the activity in relation to cost price, expense items, etc.
- Cash visibility with respect to internal processes
- Management visibility with respect to the reporting tools used
But also on development projects via:
- Envisaged development strategy and plan for its implementation
- Relevance and evaluation of the business model to the product/market pair
- Estimated budget and required resources
- Business plan and expected profitability outlook
You will understand the challenge of investing in a skilled partner, who will be the key to your project’s success.