When you raise funds, you imagine that the company will grow as soon as the funds have been raised... The reality is quite different! We grow as soon as we start the process.
The fundraising process combines two main features:
. You lose focus on the business;
. We quickly learned that what will create value is the importance of structuring the organization to start a scalability process
Although fundraising is becoming more and more frequent, the amounts are decreasing and investors are paying more and more attention to factual indicators:
- Turnover
- EBITDA
- Traction
Fundraising based on a simple business plan is becoming less common, and valuations are returning to normal levels. Valuing good managers and business leaders who use funds wisely.
How to overcome this phase, which will provide the company with the means to continue its development without getting into difficulties?
Preparing to Raise Funds
7 recommendations before starting a fundraising process:
- Have an already profitable business: the less you depend on a fundraiser, the more relaxed you will be
- Have cash flow: Have the ability to accelerate with or without a fundraiser;
- Prepare the team for the absence of the CEO for 9 months: fundraising is very demanding for the CEO, he will have to be replaced;
- look good on the outside and even better on the inside: investors hate nasty surprises, so the financial and legal side of the business must be sound and careful;
- Have a very clear vision of what you want for the next 3 years: The investor bets on a maximum investment of 3 years, ambitious but realistic
- Investors bet on people: The founders and the team are the company's biggest capital, all of which must hold up;
- Get support: a certified accountant who (really) knows the process, a specialized attorney, and a recognized fundraiser.
Learning during the process
The fundraiser: O fundraiser supports in presenting the pitch to investors by being an essential player. As in many professions, there are fundraisers and fundraisers. The best fundraisers have access to the best investors and it is no accident that they select the pitches and improve them, often improving their vision and presentation. The choice of the fundraiser is crucial.
Investors: there is a multiplicity of funds. Investment funds have a "thesis", in other words, they invest in specific areas, at specific times and with well-defined amounts. Once you have identified potential investors, the next step is to get people interested in the company, so you can choose a fund that fits the company. Keeping in mind one fundamental point, an investor comes in so that he can leave on better terms in 5/7 years. It is not a lifetime marriage, it is not there to stay indefinitely. This doesn't stop them from having the same interests as the founders... maximizing the value of the company
The auditors: Fundraising involves an audit. The famous "Due Diligences". This audit should obviously not reveal any blocking points for the fundraising, hence the need to prepare legally and financially the proposal as well as possible. This "Due Diligence" will also make it possible to detect points of improvement and security in the company, which will allow better control of future growth.
The necessary preparation, the professionals that will accompany, the due diligence carried out and the people brought together during the process make this phase a formidable accelerator for structuring the company (a little forcibly, because what was put aside suddenly becomes urgent and important) but it also clarifies and refines the company's development plan
So it's very worthwhile, the fundraising process 🙂
Joel PEREIRA
CEO VISEEON INTERNATIONAL
joel.pereira@viseeon.com
