There’s more money than ever before for SMEs with growth potential though finding the right investor means knocking on a few doors. Believe me, you don’t want to knock on more than a few.
Great entrepreneurs know that avoiding rejection requires research and discipline. Inexperienced fundraisers may find an investor but risk missing the most appropriate, or worse, accept an offer that could damage the business!
There may be eager investors and lots of money available, but the journey is far from easy. Many fundraisers fall at the first hurdle; even proposals with good potential. But rejections can be easily avoided.
We speak with many entrepreneurs but few properly due diligence potential investors. Do you meet the investment criteria? Anticipate a rapid rebuttal if you don’t. Do they invest in your stage of business? Understand your sector? How deep are their pockets? What’s their track record – they need to know yours!
Of course, a good business model is required; an achievable plan; projections with sound and validated assumptions; credible and committed management; intellectual property or other barriers to protect the business; potential returns that meet investors requirements.
Proper preparation is the key to getting through the door. If you need proof, conversations with investors suggest that only 1% to 2% of applicants receive funding. Conversely, over 60% of companies applying for funding received offers after completing the Lancashire Investment Readiness programme.
Investor selection is a critical part of the fund-raising process. Researching and understanding potential investors may seem inconsequential. Ignore it at your peril.