All entrepreneurs are familiar with the term “fundraising” and moreover most of them are regularly confronted with it. We will focus here on this financial mechanism from the perspective of young companies operating in the new technology sector and attempt to answer some crucial questions. Before that, it will be necessary to define in a simple way this method of financing and then to analyze the basic rules which make it possible to carry out a good fundraising.
Fundraising, for a business, is simply finding a means of financing outside of traditional credit organizations such as banks. In their place, for example, we will appeal to individuals through crowdfunding platforms on the internet or find “angel” investors, a term from the English expression “business angels”. Fundraising therefore includes an investment by investors in the capital of your company. Before rushing into the creation of a business plan to raise funds, it is good to know more in the following lines …
Who Is Fundraising For?
As investors wish to obtain capital gains fairly quickly, a start-up with the project of a fundraising must be sure to be able to offer serious development potential for the years to come and the income that goes with it. We are talking about Jamaican Email Addresses prospects that extend from four to six years and promise certain growth and profitability.
Fundraising, for what reasons?
In general, companies that decide to raise funds have a need for financial support. For example, they want to make significant investments in research and development, production or commercial development. These companies may also want to wish to grow nationally, as in the example of a franchise and even grow internationally.
There are also other reasons, such as the desire to start a new form of activity or to increase the size of one’s business in order to have the capacity to face growing and threatening competition.
Finally, it happens that a company plans a fundraising for the purpose of advertising, communication. Indeed, such an event is always relayed in newspapers and specialized websites, which makes it possible to make the company known to the general public and to important personalities of the business world, if necessary and undoubtedly to amplify the visibility of the company.
When to Fundraise?
This capital injection can be done at various times in the life of a company or a start-up: before the start-up of the company, during the first phase of its commercial development, but also to accelerate growth and development of the company or even when it is sold.
The first question to ask is whether this financial transaction is really necessary for the development of the company and if it does not jeopardize its sustainability. One of the important factors is to observe the economic context: is it the right time to raise funds? Is there a “firing window”, as we say in the aerospace industry? That is to say, are the conditions optimal for carrying out a financial transaction of such magnitude?
These are the basic questions that the entrepreneur must ask himself. If macroeconomic conditions are uncertain, don’t push it and put your plans off until later. Before thinking about raising funds, you have to think about a certain number of elements: all the ingredients must be gathered upstream to ensure that potential investors are convinced. To prepare well, it is preferable to meet entrepreneurs who have gone through this stage and even to attend meetings during which “pitches” are presented to investors, an essential moment to convince.