STEP 3: Attract the Right Kinds of Funders
This is generally the most difficult step in the whole process because it is very hard to get your business in front of the right kinds of funders in the time required for your business to obtain the capital and finance it needs. This is because most financial deals go through a number of stages including:
- Vetting – where a representative of a funder looks at business opportunities and judges them on there potential and fit with the funders goals. Only the best opportunities make it past this initial filter.
- Engagement – Once a potential opportunity has made it through the filter and is vetted, the funder and business owners/managers must begin forming a relationship.
- Due diligence – Once the business relationship begins evolving and the funder is satisfied that there really is an opportunity backed by a strong leadership team, the funder may want to get more detailed and candid information about the financial status of the company as well as its history and outlook.
- Negotiation – Once the funder has confirmed that the business has financial potential as well as strong leadership, the negotiations begin. Any number of terms and conditions can be included in this process depending on the state of the business in question and how much capital is required.
- Closing – Finally, a legal agreement is created and signed which binds all parties to the terms and conditions agreed upon in the negotiation process.
It almost all cases, the relationship continues on from here as the funder will typically want regular updates on business progress and may even help the business resolve any challenges it is having through connections or access to resources.
A potential business deal can fall apart at any one of the above stages which is why the task of fundraising can sometimes seem daunting to small and medium-sized business owners. And, unfortunately, there are many different sources of capital so pursuing the wrong kind of capital can waste a lot of time and resources.
Our representatives can help you seek out the right source of capital to save you and your business precious time. Contact us today to get started.