New generations of entrepreneurs who have developed their business to the point of needing investors to build bigger ones are hesitant to relinquish control of their business. CEOs who are raising capital for their business want to know that the investor can bring a profit to their business. Entrepreneurs are more likely to relinquish some control of their business if they feel strong chemistry between themselves and the investor and if the investor has strong skills with many connections to help grow the business.
Venture capital firms look for businesses with solid business plans that are realistic. Business plans should outline financial planning for the future growth of the business covering all aspects. Plans must demonstrate beyond any doubt that the projected plans are sound and why more funding is needed. The documents must show how much money is needed for the business to grow and become profitable.
Most investors are also considering those businesses where the owner has put their own money into the success of the business. If the owner is willing to take the risk, investors appear to be more willing to put up the additional capital needed. Entrepreneurs who are willing to take personal risk often work harder to grow the business.
When presenting business plans to investors, make sure the presenter has a good understanding of management and can be forceful in bringing the facts to the table. Make sure that the entire team presenting business plans to potential investors is well versed in presenting the plans. Investors want to see a positive attitude from those who are going to run the business and spend investors’ money.
Investors will want to see the company’s financial statements and budget plans. If the business is running, create a quick layout of the finances and how the business is doing. Investors are not looking for a perfectly financially sound business. They are looking to see how finances are handled and what improvements need to be addressed.
Equity investors are in high demand. Make sure all business plans are fully prepared correctly and all presenters are equipped with the proper financial reports, charts and budgets for the business. A poor presenter could decrease the company’s chances of getting the financial money needed to grow or expand a business. Investors will ask all kinds of questions and the answers should be what investors are looking for without any doubt from the presenter. Presenters must know the business inside and out and be able to have the patience to answer questions from more than one investor.
The final step would be to show exactly how much money is needed and how it will be spent to improve the business for future growth. Do not inflate the necessary amount of money. Investors know business finance very well and don’t gamble when they invest their money.
