The issue of how to raise money for your business is a vexing one for young companies with big ambition. Raising money for your business is not something that can be learned in a book or in a business school. There are many “How to Books” out there and many courses on capital formation in the best B-Schools. Yet, they offer only superficial answers like tapping the capital markets or crowd funding. The key to this process lies in empowering yourself with information about the types of capital available for your specific business. Many companies waste a lot of time trying to find venture capital or private equity. Unbeknownst to them, most venture capitalists or private equity investors have very tight criteria. They only want companies in a certain industry, at a certain stage and at a certain size.
Furthermore, they are very particular about products, operations and management. The best way to go about raising money for your business is by seeking counsel with a capital raising advisor. These advisors are experts in capital raising and the different types of capital available for your business. They can take the mystery of how to raise money for your business and vastly simplify the whole process. Usually, these people have years of experience with young, growing companies and have pre-existing contacts in various capital markets. Once having decided which type of capital to go after, you have to approach the capital raising process in a strategic way. You need to form a professional business plan that describes your business and how it is differentiated.
You also need to develop a large universe of contacts within the market. Capital raising is a very sophisticated sales process. There are various components to the entire process which involve different skills including relationship building, information communication, salesmanship, analysis and data organization. If these skills are lacking in your company, you should outsource them to an advisor who can structure the process and make sure you are prepared for each stage. Often, the best advisors are those with past results who have done successive rounds for those clients. Employing the right advisor will unlock the mystery of how to raise money for your business.