Fundraising is a complex and sometimes decisive operation for the survival of companies. She does not improvise! Far too many entrepreneurs launch a fundraising request without knowing the tenants and the outcomes of such an approach. Here are a few things to help you prepare well and maximize your chances of success.
Preparation: a basis
It is the rarest of encounters with business leaders who embark on a request for a level with two main motivations:
- I will respond to a development project
- I will respond to a cash flow problem.
It is a question of having, obviously, the answer to four fundamental questions: What is your Project? What do you want to fund? For what amount? What is your share of the investment in the project?
The work does not stop there at all since you must know how to answer other questions that generally interest your investors and in particular those relating to their capital outflows. The law understands that a majority of them do not intend to remain ad vitam aeternam within your structure and live off the profits of the business. In the majority of cases, they want to exit one day, which very often happens when a company buys their share or when an investment fund arrives. They must therefore be aware of a certain potential of the company or of a particular interest in what you do for certain companies.
The keys to good preparation
It is still useful to pose the subject and shed light on the essential prerequisites for the implementation of a fundraising approach. To be effective, you have to be effective, so it’s the director’s ability to make the right investment by setting up the project, to have a preliminary diagnosis carried out and give the fundraising program every chance.
It must be carried out before any requests for aid, subsidies, competitions or entry into the capital, which generally results in the presence of a business plan making it possible to highlight the activity, the organization of the company, its modes of operation, the necessary needs and the resources to be found. Once again you need to monitor the proper use of funds, reduce your economic capacity and the proper management of affairs. This work can be appointed to an expert in financial optimization, which guarantees you all the objectivity of his analysis but can have a cost.
On what is this diagnosis called “Due Diligence” carried out?
It is based on current activity but also on the future through:
- the provisional budget for the financial year with regard to the commitments made
- the profitability of the activity with regard to the resale price, the positions of the thoughts, …
- the visibility of cash with regard to internal processes
- management visibility on the reporting tools used
More also on development projects through:
- the development and planning strategy envisaged for its realization
- the relevance of the Business Model on the Product/Market couple and its valuation
- The provisional budget and the necessary resources
- Business plan and profitability outlook
You will apprehend the investment effort as an effective partner, who will bring you the skills for success in your project.