The answer processes in the chief-raising action accommodate 1) perfecting the bag aim, offering memorandum, and other company due diligence materials, 2) developing a comprehensive, targeted prospective investor list, 3) contacting this list and responding to investor due diligence requests, and 4) negotiating the transaction.
Completing the bag aim typically requires at least 200 hours of assignment. This age is dedicated to conducting the marketplace research to validate the befalling, developing a comprehensive financial model, determining the most able road to lay out the bag strategy, and actually writing and proofing the bag aim.
The abutting step, developing a comprehensive, targeted prospective investor list is again actual age consuming. There are thousands of abeyant investors, each of which has actual altered tastes regarding the types of ventures that absorption them. Some invest by marketplace sector (e.g., healthcare vs. telecommunications), stage (seed stage vs. subsequent stage), geography, or a combination of these. Abounding hours must be dedicated to actuate which investors are the adapted fit for your adventure. This action involves creating a expert investor list, visiting each investors website to appearance investment criteria and former investments, and determining who is the adapted contact at the firm.
To beam how easily the age adds up, accede that alone about 25% of prospective investors who appearance an initial absorption in a transaction actually progress to detailed company due diligence. Alone about 10% of this 25% actually progress to a bonafide action of funds, of which alone 25% of these actually aftereffect in an investment transaction. So completing a financing transaction requires, on average, contacting approximately 160 pre-able prospective investors.
The due diligence action, where investors scrutinize the investment, can again be actual age consuming for the company. Investors generally appeal abounding documents, some of which can be easily retrieved from files (e.g., prior levy returns), while others may booty added age to prepare (e.g., supplementary marketplace analysis, customer lists with former purchases, contact advice, etc.). Finally, negotiating a transaction can booty a cogent amount of age depending upon the complexity of the transaction and figure of parties involved.
Too abounding companies fail to lift chief since they are unaware of the cogent age requirements to accomplish so. Those firms who accept these requirements and budget accordingly are the ones most likely to persevere and borderline up with the chief they charge.
About the author:
has developed over 200 bag plans for clients that accept collectively raised over $750 million in financing, launched abundant advanced product and service lines and gained competitive advantage and marketplace share. GT Bag Plans is the sister site of
Originall posted December 28, 2011