Archive: Nov 2015

  1. Raising finance – faster, better, cheaper

    Leave a Comment

    How? The answer is ‘Investment Readiness’. What is it?

    → It’s providing sufficient information, credibility and trust to investors to motivate them to invest in your proposition.

    Route to Success

    In order to successfully raise funding, whether equity, loans, grants or other forms of finance, a company must be in good shape and sufficiently attractive to the providers of funds. A company with higher investability, that makes the providers ‘feel right’ about advancing funding, will have a greater chance of getting finance and will secure it both quicker and cheaper. Essentially, getting a company investment ready is all about carefully preparing it and its people to present the right image and proposition to investors and bankers.

    The need for Investment Readiness
    •    There is a fundamental knowledge gap in most SMEs such that they do not know the options for financing and which sources would be relevant to their strategy
    •    There is also much evidence that many SMEs do not seek funding because they are unsure about the process and resistant to giving up any equity due to anxiety about losing control of the business
    •    The low quality of applications for funds results in a high failure rate, particularly those for non-bank risk money. Many business plans may have inherent merit, but are either insufficiently developed or are inappropriately structured. This reflects badly on the entrepreneur’s ability

    Main problems with Business Plans

    •    Quality of team
    •    Vision/strategy unclear or not well articulated
    •    Too many facts, not enough analysis
    •    Lack of commercial reality
    •    Lack of credibility in financial projections
    •    No real customer need or benefit established / lack of USP – Too ‘ME TOO’
    •    Too complicated
    •    Insufficient growth potential
    •    Route to market unclear / vague on market drivers
    •    Insufficient evidence of demand
    •    Competition complacency and not properly identified
    •    Lack of contingency planning
    •    Assumptions are fuzzy
    •    Unclear on need and level of funding
    •    Exit not well defined

    Key stages in the Readiness process

    •    Identifying the most appropriate sources of money and discussion and analysis of the effect of any ownership dilution. The benefits and downsides of raising equity
    •    Reviewing the business to identify and correct shortfalls or omissions that would impact on an investment decision
    •    Guidance on investor expectations and attitudes
    •    Help with preparation of the business plan and of the live presentation
    •    A mock run through of the due diligence process to ensure all queries are covered, including legal, financial, management, marketing, competition
    •    Marketing of the proposition (if required)
    •    Mentoring through the funding and due diligence process
    •    Post-investment management guidance